Find out how much house you can afford based on your income, monthly debts, and down payment using the standard 28/36 lending rule.
This calculator uses the 28/36 rule, the most widely used lending guideline. The rule states that your total monthly housing payment should not exceed 28% of your gross monthly income (front-end ratio), and your total monthly debt payments including housing should not exceed 36% (back-end ratio).
The calculator takes the more restrictive of these two limits. If you have significant existing debts, the 36% back-end ratio may limit your home price more than the 28% front-end ratio. It then reverses the mortgage payment formula to find the maximum loan amount that fits within your budget, and adds your down payment to determine the maximum home price.
The "Conservative" estimate uses 25% of gross income for housing, leaving more room for savings and unexpected expenses. The "Moderate" estimate uses the standard 28%. The "Aggressive" estimate uses 33%, which some lenders allow for borrowers with strong credit and low other debts, but leaves less financial flexibility.
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