The 28/36 rule, explained quickly
Lenders evaluate affordability through two debt-to-income (DTI) ratios — and both have to pass. Front-end DTI is just your housing payment (mortgage P&I + property tax + insurance + HOA) divided by gross monthly income; the conservative cap is 28%. Back-end DTI is housing PLUS every other monthly debt minimum — auto loan, student loan, credit-card minimums, child support, alimony — divided by gross income; the safe cap is 36%. The calculator above solves backward from those caps to the max home price that fits.
The lower of the two ratios always wins. If you have $0 other debts, front-end usually binds (28% of income is less than 36%). If you have substantial other debts — say, $1,500/month in combined auto + student + credit-card minimums — back-end binds and your housing budget shrinks fast. The “what capped your number” box in the result tells you which lever actually changes your affordability.
Lender approves vs. comfortably afford
A useful distinction. Many lenders will approve well past 36% back-end DTI — Fannie Mae allows up to 45% manual underwriting with credit / reserve compensating factors and up to 50% via Desktop Underwriter; FHA tolerates 43% back-end (and higher with comp factors). Those numbers are about default risk and program rules, not your quality of life. At 43% DTI, almost half your gross income is going to debt service before any tax, retirement, healthcare, childcare, or unplanned expense.
The 28/36 rule (this calculator's default) is the conservative version that's also a sane personal-finance number. Most homeowners who feel “house-poor” bought near the lender ceiling, not the conservative one. If you want to see what a 43% back-end approval looks like, set the slider higher — but be honest about the lifestyle cost.
Three levers that move your number most
- Mortgage rate.A 1 percentage point change in rates moves affordability 8-12% at the same income. The single biggest macro lever — and one you don't control. The Fed, the Treasury and MBS markets, inflation expectations, lender spreads, and your own credit profile all influence where your specific rate lands. The rate outlook page tracks the FOMC, the bond market, and the current direction of mortgage rates.
- Other monthly debts.If back-end DTI is binding (the result tells you), retiring debt minimums is the fastest path up. A $400/month auto-loan payment paid off entirely shifts $400 of monthly capacity directly into housing — that's about $50,000-$70,000 of additional home price at typical rates and terms.
- Down payment.Each additional $10k of down payment lets the same monthly carrying-cost budget cover roughly $10,500-$11,000 more in home price (down payment offsets dollar-for-dollar against price; the small extra is because bigger down means lower P&I per dollar of home price). Down payment moves the number predictably; it's also the lever most under your direct control.
What this calculator does NOT include
- PMI.Down payment under 20% on a conventional loan triggers private mortgage insurance — typically 0.3-1.5% of loan amount per year. The calculator doesn't add this; if you're putting less than 20% down, expect your real PITI to run $80-$300/month higher than the output shown.
- Closing costs.2-5% of home price, paid at close, mostly in cash. Not in the affordability math because they don't affect monthly DTI — but they do affect whether you can actually close.
- Local tax + insurance variation. Defaults are US-national-median (1.2% property tax, 0.35% insurance); adjust for your state. NJ property tax runs 2.2% of value; HI is 0.3%. Florida and California insurance run double the national average in coastal / fire-prone zones.
- Maintenance + utilities. Rule of thumb is 1-2% of home value annually for maintenance. Not a lender consideration but a real ongoing cost — affordability that looks fine on paper sometimes pinches once a roof or HVAC replacement hits.
Frequently asked
How do lenders decide how much house I can afford?
Two debt-to-income ratios — both have to pass. Front-end DTI is your projected housing payment (mortgage PITI + HOA) divided by gross monthly income; the conservative cap is 28%. Back-end DTI is housing PLUS all other monthly debt (auto, student, credit-card minimums) divided by gross income; the safe cap is 36%. Fannie Mae allows up to 45% back-end manual underwriting (with credit/reserve compensating factors) and up to 50% via Desktop Underwriter; FHA tolerates 43% back-end (and higher with comp factors). Above 50%, most lenders decline. The lower of the two constraints sets your max — this calculator surfaces which one is binding.
Why does 'how much house can I afford' depend on my mortgage rate?
Because the rate determines what monthly payment a given loan amount produces. At 5%, a $300k loan costs about $1,610/month in P&I (30-year). At 7%, the same $300k loan costs about $1,996/month — almost $400 more for the same loan. Since your DTI cap fixes a ceiling on monthly payment, a higher rate forces you to a smaller loan to stay under the cap. A 1 percentage point rise in mortgage rates typically cuts affordability by 8-12% at the same income.
Should I use 28/36 or stretch to 43%?
Honest answer: 28/36 is the safe number; 43% is a stretch line, not a regulatory cliff. Many lenders go higher than 43% — Fannie Mae Desktop Underwriter allows up to 50% back-end — but borrowing right at 43% means almost half your gross income is going to debt service before taxes, retirement, kids, healthcare, or any unplanned expense. Most personal-finance advisors recommend keeping back-end DTI under 36% — the lender's safe number is also a sane personal-finance number. The calculator above defaults to 28/36; the 43% line is documented but not the default.
Does the calculator include property tax and insurance?
Yes — that's the difference between a 'monthly mortgage payment' calculator and an 'affordability' calculator. The PITI output includes principal and interest (the loan payment proper), property tax (which scales with home value, not loan amount), homeowners insurance (also scales with home value), and any HOA. Default tax rate is 1.2% annual (US national median); insurance default is 0.35%. State variation is huge — NJ runs 2.2% property tax, HI ~0.3%, Florida insurance is double the national average — adjust for your local numbers. The PITI output reflects actual carrying cost, not just the loan payment.
I make $100k. How much house can I afford?
It depends on your other debts, down payment, and mortgage rate — that's why the calculator above takes those inputs. Rough range: a $100k salary ($8,333/mo gross) with $400/mo other debt, $50k down, and a 7% mortgage rate caps out around $310k-$340k home price under standard 28/36 DTI rules. Drop other debt to zero and the same income supports about $325k-$355k. Push to a 5% rate and the affordability jumps to $370k-$400k. The headline 'I make $X' question doesn't have a single answer — affordability moves with rates and debt load more than with income alone.
Related calculators
Engine logic in lib/calculator/home-affordability.ts. DTI thresholds sourced: Fannie Mae Selling Guide B3-6-02 (36% manual base, up to 45% with comp factors, up to 50% via Desktop Underwriter); HUD Handbook 4000.1 II.A.5.d.iii (FHA 31% front-end / 43% back-end guidelines); 12 CFR 1026.43(e)(2) — current General QM (price-based since October 2022; the prior 43% DTI cap was eliminated by the December 2020 General QM Final Rule); 12 CFR 1026.43(e)(5) — Small Creditor QM (still a 43% DTI threshold for narrow small-creditor scope). Property tax + insurance defaults are US national median values; both vary materially by state and property type. Not financial advice; lender underwriting varies and is the source of truth for any specific approval decision.