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What "how much house can I afford" really means
There are three different answers to the question. There is what a lender will approve, which can be generous. There is what fits under standard debt ratios, which is what this calculator shows first. And there is what you can live with while still saving, travelling and handling surprises. The gap between them is where people get into trouble, so the tool shows all three levels next to each other instead of one big number.
How it works
You enter income, monthly debts, down payment and the assumptions that affect cost: rate, tax, insurance, HOA and PMI. The calculator finds the maximum monthly housing payment allowed under both ratio limits and takes the smaller one. It then searches for the home price at which the full payment (loan, tax, insurance, HOA, PMI) equals that limit. The result tells you which limit was binding, because that tells you what to fix: a housing-ratio limit points to income or price, a debt-ratio limit points to your existing debts.
How the price is calculated
Maximum payment is the smaller of (housing ratio × monthly income) and (debt ratio × monthly income − monthly debts). A price qualifies if loan payment + tax + insurance + HOA + PMI ≤ maximum payment, and the highest price that does is your answer.
Worked example: $100,000 income, $40,000 down, 6.5%
Monthly income is $8,333. With $500 of debts, the 28% housing limit is $2,333, which is lower than the debt limit of $2,500, so $2,333 a month is the cap and the affordable price is about $317,000. The cautious 25/33 tier gives about $285,000, and the stretch 31/43 tier about $350,000.
Now raise monthly debts to $1,500. The total-debt limit becomes the constraint, housing drops to $1,500, and the price falls to about $210,000. Paying off a car loan can add more buying power than a raise.
Beyond the ratios
Rate matters more than it looks
A quarter-point change in rate moves your maximum price by a few percent. Improving your credit score before you apply is often the cheapest way to raise your budget. See the payment behind any price on the main mortgage calculator.
Cash to close is separate
The down payment you enter here is only part of the cash you need. Budget for closing costs, moving and immediate repairs. Government programs change the math: the FHA loan allows a smaller down payment, and the VA loan and USDA loan can require none.
Compare with renting
If you are not sure buying is right yet, put your numbers into the rent vs. buy calculator.
Estimate only. Lenders review credit, assets, employment and other factors before approving a loan.
Frequently asked questions
What is the 28/36 rule?
It is a common lending guideline: housing costs should stay at or under 28% of your gross monthly income, and all monthly debt, housing included, at or under 36%. Lenders use it as a starting point, not a hard rule, and some loan programs allow higher ratios. The two fields are editable so you can test other limits.
Does the calculator use gross or take-home income?
Gross, meaning before taxes, because that is what lenders use. Take-home pay is a useful second check. If the payment feels tight against your actual paycheck, choose the Comfortable row in the table rather than the Standard one.
Which debts should I include?
Enter the minimum monthly payments on car loans, student loans, credit cards, personal loans and child support or alimony. Do not include utilities, groceries or insurance premiums unrelated to debt. Rent goes away when you buy, so leave it out.
Why does a small monthly debt change the answer so much?
Because every dollar of debt payment comes straight out of what you can spend on housing under the total-debt ratio. In the default example, adding $1,000 a month of debts cuts the affordable price from about $317,000 to about $210,000, since the debt limit becomes the binding one.
What does this leave out?
Closing costs, moving costs, repairs, furnishing and utilities. A widely used planning habit is to budget around 1% of the home's value each year for maintenance. The estimate also assumes the rate you enter, and your real rate depends on credit score, down payment and loan type.
How does my down payment change what I can buy?
It does two things: it shrinks the loan, and at 20% or more it removes PMI. A larger down payment raises the price you can afford for the same monthly limit. Try adding $20,000 to see the price move.