How do lenders estimate how much house I can afford?

Many use debt-to-income guidelines. This calculator uses 28/36: housing up to 28% of gross monthly income, and housing plus other debts up to 36%.

What is the 28/36 rule?

Front-end DTI caps housing (PITI) at 28% of gross monthly income. Back-end DTI caps housing plus monthly debts at 36%. The tighter of the two sets the max payment.

Does a larger down payment let me buy a more expensive home?

Yes. A larger down payment reduces the loan needed for a given price, so the same qualifying payment can support a higher purchase price.

Is this the bank’s number?

No. Lenders use their own overlays, credit, reserves, and product rules. Treat this as a guideline, not an approval.

Cut monthly debts or the purchase price. A larger down payment can also lower the loan needed for the same house.

← All Tools

How Much House Can I Afford

Estimate a purchase price from income, debts, rate, and down payment.

Annual income ($)

Monthly debts ($)

Down payment ($)

Interest rate (%)

Loan term (years)

Property tax / year ($) optional

Insurance / year ($) optional

Estimated home price

—

Loan amount

—

Monthly PITI

—

Max housing payment

—

Uses 28/36 guidelines: housing up to 28% of gross monthly income, and total debt up to 36%.

Next step: stress the payment on Mortgage or a rate cut on Refinance. We do not sell lender leads yet. As an Amazon Associate, DynDisc earns from qualifying purchases on Picks.

How this affordability calculator works

Enter gross household income, a target housing ratio (commonly around 28% of gross for the housing payment), existing monthly debts, down payment, rate, and term. The tool estimates a maximum PI payment from income and debts, then backs into a loan amount and an approximate home price. It is a guideline for shopping range — not a lender approval, pre-qual, or underwriting decision.

Lenders look at debt-to-income (DTI), credit, assets, and the property. This page only answers: “If I keep housing near this percent of gross and my other debts stay put, what price ballpark fits?”

Guideline, not approval

A 28/36-style rule of thumb is a starting point, not a promise. Some programs allow higher DTI; some buyers should stay lower for cash-flow safety. Taxes, insurance, and PMI can push the real draft above PI — cross-check the payment on the mortgage calculator with tax and insurance filled in.

Gross income here should match what you would report to a lender (W-2 wages, etc.). Do not plug take-home from the paycheck calculator into this tool as if it were gross.

Debts, down payment, and rate sensitivity

Car loans, student loans, and minimum credit-card payments shrink what is left for housing. A larger down payment raises the price you can support for the same monthly PI. Rate moves the loan size hard: a small rate increase can knock tens of thousands off the affordable price at the same payment.

If you already own and are weighing a rate cut, use refinance. If you are sizing a non-mortgage debt, use loan or debt payoff.

How to use the verdict

Shop homes inside a range you can sleep with, not the absolute maximum the math allows. Re-run when income, debts, down payment, or quoted rates change. Treat lender pre-approval as the real ceiling; this page is the planning floor.

FAQ

How much house can I afford?: A common starting point is keeping the housing payment near 28% of gross income while total debts stay near 36%. This calculator turns those inputs into a loan and price estimate. Lenders may allow more or less based on credit and program.
Is this a mortgage pre-approval?: No. It is an educational guideline. Only a lender can pre-approve you after reviewing income, credit, assets, and the property.
Should I use gross or net income?: Gross. Affordability and DTI rules are based on gross income. Net from a paycheck calculator is for budgeting take-home, not for this page.
Does this include taxes and insurance?: The core math targets a PI-style housing payment. After you have a price, run the mortgage calculator with tax and insurance to see a fuller monthly total.
What debts should I include?: Monthly minimums you already pay: auto, student loans, personal loans, and revolving credit minimums. Do not double-count the new mortgage payment.
Why does a small rate change move the price so much?: Payment and rate determine loan size. At the same payment, a higher rate supports a smaller loan — and therefore a lower home price after you add the down payment.
When should I look at refinance instead?: When you already have a mortgage and want break-even on a lower rate. Affordability is for purchase shopping range.