How to work out how much house you can afford
- Enter your household Income before tax, the Debt payments you make each month (car, student loans, card minimums) and your Down payment.
- Enter the mortgage Interest rate and Term, plus property tax, insurance and any HOA fees for the area you’re looking in.
- Read the highest price that keeps housing within 28% of your income and all debts within 36%. Change the two limits if your lender uses different ones.
Debt-to-income ratios
Lenders judge affordability mainly by your debt-to-income ratio (DTI): monthly debt payments divided by gross monthly income. The 28/36 rule uses two ratios:
| Ratio | What it counts | Limit |
|---|---|---|
| Front-end (housing) | Mortgage payment, property tax, insurance, HOA | 28% |
| Back-end (total) | Housing plus car, student loan, card and other debt payments | 36% |
The limits are guidelines, not laws. Different loan programs and lenders allow different ratios, so if yours quotes other limits, type them into the last two boxes.
Affording it is more than qualifying
The highest price you qualify for isn’t always the price you should pay. Leave room for maintenance and repairs, which come with owning a home, plus utilities, furniture and an emergency fund. Closing costs aren’t included here and are paid up front on top of the down payment. Once you have a price in mind, the mortgage calculator shows the full payment schedule.