Mortgage Affordability Calculator
This mortgage affordability calculator helps you estimate how much home you may be able to afford based on your income, debts, and monthly housing budget. It is useful for first-time buyers, refinancing decisions, and setting realistic home shopping expectations.
Financial Details
Affordability
Enter your financial details to calculate home affordability.
The 28/36 Rule Explained
This calculator uses the 28/36 rule, the most widely used affordability guideline in mortgage lending. The first number (28%) caps monthly housing costs — mortgage principal and interest, property taxes, homeowner's insurance, and HOA dues — at 28% of your gross monthly income. The second number (36%) caps total monthly debt payments (housing plus car loans, student loans, credit cards, and other obligations) at 36% of gross income.
In practice, lenders use a similar metric called the debt-to-income ratio (DTI). Conventional loans typically allow a maximum DTI of 43–45%, and FHA loans up to 50% in some cases. The 28/36 rule is more conservative than the maximum lenders will approve — it represents a financially comfortable limit, not the maximum you can borrow.
What Lenders Actually Look At
Income and debt ratios are just part of the underwriting picture. Lenders also evaluate your credit score (most conventional loans require 620+; the best rates need 740+), down payment (3–20%; less than 20% triggers PMI), employment history (typically 2 years in the same field), assets and reserves (lenders want to see 2–6 months of mortgage payments in savings), and loan-to-value ratio. Two borrowers with identical incomes and debt can receive very different loan amounts based on these other factors.
Frequently Asked Questions
Should I borrow the maximum amount I'm approved for?
Almost always no. Lenders approve the maximum you qualify for under their risk parameters — not the amount that will keep you financially comfortable. Maxing out your mortgage budget leaves little room for property taxes and insurance increases, repairs, job loss, or other financial changes. A widely recommended guideline is to target a mortgage payment at 20–25% of take-home (after-tax) pay, not gross income. This leaves breathing room for retirement savings, emergencies, and other financial goals. Being "house poor" — owning a nice home while unable to save, travel, or handle emergencies — is a common and difficult situation to escape.
How does my credit score affect how much I can borrow?
Credit score affects your mortgage rate, which directly changes how much loan you can afford at a given monthly payment. A 750 score might qualify for a 7.0% rate; a 650 score might get 7.75% on the same loan. On a $300,000 mortgage, that 0.75% difference is about $160/month — or roughly $20,000 over five years. A higher score also opens access to conventional loans (which have lower costs than FHA for well-qualified borrowers) and may eliminate some lender fees. Improving your credit before applying — paying down credit card balances is the fastest lever — can meaningfully increase your affordable loan amount.
Does this calculator account for property taxes and insurance?
The maximum monthly payment in this calculator is based on income and debt ratios — it represents the total housing cost budget including taxes and insurance. Your actual mortgage payment (principal + interest) should be lower than this maximum so that taxes and insurance fit within the budget. Property taxes vary widely: $2,000–$5,000/year in low-tax states, $8,000–$15,000/year in high-tax areas like New York, New Jersey, and Illinois. Homeowner's insurance typically runs $1,000–$2,500/year. Get estimates for your target area and subtract those from the total housing budget to find what mortgage payment you can actually afford.