The 28/36 rule
Most lenders cap your housing payment at 28% of gross monthly income (the front-end ratio) and your total debt at 36% (the back-end ratio). This calculator uses the lower of the two limits, then backs out the home price that fits โ including an estimate for property tax and insurance.
Why your down payment matters
A bigger down payment buys more home for the same monthly budget and, once you reach 20%, removes PMI (private mortgage insurance). It also lowers the loan amount, the interest you pay over time, and the lenderโs risk.
What the estimate leaves out
Credit score, PMI, HOA dues and closing costs all affect what a lender will actually approve. Treat this as a planning figure and get a pre-approval for a precise number.
Frequently asked questions
How much house can I afford on $100k?
With typical debts, a 6.5% rate and $40k down, the 28/36 rule points to roughly $330kโ$350k. Lower debts, a bigger down payment or a lower rate raise that figure.
What counts as monthly debt?
Recurring obligations a lender sees: car loans, student loans, minimum credit card payments and other installment loans. Utilities and groceries donโt count.
Does this include property tax?
Yes โ it sets aside an estimated percentage of the home value each year for property tax and insurance, since lenders include those in the affordability test.