How affordability is calculated
Lenders usually limit housing costs to 28% of gross monthly income (front-end ratio) and all monthly debts, including the new mortgage, to 36% (back-end ratio). The calculator uses the lower of the two limits to find the maximum monthly payment, then converts it to a home price.
Example
With a $100,000 yearly income, $500 in monthly debts and $60,000 for a down payment at 6.5% for 30 years, the 28/36 rule allows a housing payment of about $2,333 a month. That supports a home price of about $354,399.
Ways to afford more house
- Pay down credit cards and other debts to lower your back-end ratio.
- Save a larger down payment to borrow less and avoid PMI.
- Improve your credit score to qualify for a lower rate.
Frequently asked questions
What is the 28/36 rule?
It is a lending guideline: housing costs should stay under 28% of gross monthly income, and all debt payments including housing under 36%.
What counts as monthly debt?
Minimum payments on car loans, student loans, credit cards and other recurring debts. Utilities and groceries are not included.
Can I borrow more than this?
Some loan programs allow higher ratios, but a payment within the 28/36 rule is easier to manage alongside savings and other expenses. Use the DTI calculator to check your ratios.