What is the 28/36 rule?

It is a common lender guideline: your mortgage payment (PITI) should not exceed 28% of your gross monthly income, and your total debt payments (including the new mortgage) should not exceed 36%.

How does the interest rate affect affordability?

Interest rates have a massive impact. A 1% increase in interest rates can reduce your home buying power by about 10%, as more of your monthly payment goes toward interest rather than the home's price.

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Home Affordability Calculator - Real Estate Budgeting

Estimate how much home you can afford based on your income, debts, and down payment. Get a realistic price range for your home search.

Before you fall in love with a property, you need to know if it fits your financial reality. Lenders look at more than just your credit score; they evaluate your 'Debt-to-Income' ratio to ensure you aren't overextending yourself. Our Home Affordability Calculator uses standard industry guidelines to estimate the maximum home price you should consider. By factoring in your annual income, existing monthly debts, and the current interest rate environment, we provide a safe 'upper limit' for your home search, helping you target houses that won't leave you 'house poor'.

Annual Income

Monthly Debts

Down Payment

Interest Rate (%)

Maximum Home Price

$306,868.93

You can afford a home up to $306,868.93 with a max monthly payment of $1,750.00

Annual Income$75,000.00

Monthly Debts$500.00

Down Payment$30,000.00

Interest Rate (%)6.5%

How it Works

The tool calculates 28% of your monthly gross income to find your maximum monthly housing budget. It then uses the current interest rate and a standard 30-year term to back-calculate the loan amount that fits that budget, adding your down payment back in to find the final home price.

Calculation Formula

Price = [Pmt / (standard mortgage factor)] + Down Payment

Calculation Examples

1. **Standard**: With $100,000 income and $20,000 down payment at 6.5% interest, you can afford a home around **$380,000**.

Why use this tool in your daily life?

Your home is your sanctuary, not a financial burden. Use this tool to set a realistic budget *before* you start shopping, ensuring your new home brings you joy rather than constant financial stress.