Home affordability calculator

Why this gives you three prices, not one

A single affordability number is the most misleading output in personal finance, because it answers a question nobody asked. The lender’s question is what is the most we can safely lend. Your question is what can I buy without the house owning me. Those have different answers, and the gap between them is usually a hundred thousand dollars or more.

So the table gives you three. The conservative row holds housing to a quarter of gross pay, which leaves room to keep funding retirement and to absorb a bad year. The 28/36 rule row is the long-standing guideline and the headline figure here. The lender ceiling row is roughly the most a conventional underwriter will approve — useful to know, and a bad target.

Each row shows what is left every month once the house, your existing debts and a maintenance reserve are paid out of take-home. That last column is the one to read. A price that leaves you a few hundred dollars a month is not affordable in any sense that matters, however cheerfully it was approved.

Gross pay is not what buys the house

The 28/36 rule is stated against gross income because it was written for lenders, who can see your gross pay and cannot see your life. But the mortgage leaves your account after federal tax and FICA have already gone, so 28% of gross is a materially larger share of what you are actually paid — and the higher your income, the wider that gap opens.

This page therefore computes your federal take-home from the current IRS rate schedules and the standard deduction, using the filing status you select, and reports the housing cost as a share of both. Seeing the two side by side is usually the moment the exercise becomes concrete.

One honest limitation: state and local income tax is not included, because it varies too much between jurisdictions to estimate responsibly without a sourced dataset for each one. If you live somewhere with a meaningful state income tax, your take-home is lower than shown and your true share is higher. Retirement contributions, health premiums and childcare are not deducted either — the paycheck calculator handles those properly if you want a precise net figure to work from.

How to use this calculator

1. Household income gross, and only from people who will be on the loan. A partner’s income that is not on the application does not count toward qualifying.
2. Filing status, so the take-home figures are yours rather than a generic estimate.
3. Monthly debt payments. The minimums lenders can see on your credit report: cars, student loans, cards, child support. Not groceries, utilities or your current rent.
4. Down payment and rate. Below 20% down, mortgage insurance is added automatically at the rate in the advanced panel.
5. Property tax rate for your county — this single field can move the answer by tens of thousands, and the national average is not your county.
6. Advanced holds the mortgage insurance rate, closing costs, and the maintenance reserve.

Everything recalculates as you type, and nothing you enter leaves your browser.

What the 28/36 rule actually says

Two limits, both against gross monthly income. The front-end ratio caps total housing cost at 28% — principal, interest, property tax, insurance, mortgage insurance and any HOA fee, not just the loan payment. The back-end ratio caps housing plus every other debt payment at 36%.

Whichever binds first is your constraint, and the calculator tells you which one it is. That matters because the fix differs. If your income is the binding limit, the price only moves when the income does. If your debts are binding, then clearing a car loan raises what you can buy by far more than the payment itself — every dollar of monthly debt payment you remove frees a dollar of housing capacity, which at a typical rate is worth well over a hundred dollars of price for each dollar cleared.

The rule’s age is worth knowing rather than holding against it. It comes from an era of higher down payments and lower house-price-to-income ratios, and in expensive metros almost nobody buys inside it — which is why lenders quietly allow far more. Treated as a description of what is prudent it still holds up well; treated as a description of what is common in a costly market it does not, and that tension is real rather than something a calculator can resolve for you.

Underwriters are more flexible than the rule in practice. Conventional loans commonly go to 43% back-end and, with strong compensating factors, beyond it; FHA loans stretch further still. That flexibility is priced into their risk model, not yours.

The costs affordability calculators leave out

• Maintenance. A common planning figure is about 1% of the home’s value a year, more on an older house. No lender counts it, and it is the single biggest reason new owners feel squeezed. It is in the advanced panel and in the left-over column.
• Closing costs. Typically 2–5% of the price on top of your down payment. The down payment is not the cash you need — the result shows both.
• The move itself, plus the appliances, the blinds, the lawn mower and the first repair. Budget for it separately and do not let it come out of your emergency fund.
• Higher utilities if you are moving from an apartment to a house, which is easily a couple of hundred dollars a month more.
• Insurance and tax increases. Both rise over time, and in some markets insurance has risen sharply. Your payment is not as fixed as a fixed-rate loan implies.

None of these appear in a pre-approval letter, and all of them appear in your account. A reasonable habit is to try living at the new number before committing to it: for two or three months, move the difference between your current rent and the full housing cost above into savings. If that is uncomfortable, the price is too high, and you will have learned it for the cost of an inconvenience rather than a decade of one.

How to raise what you can afford

In rough order of effect per unit of effort. Clear a debt payment — the leverage is remarkable, because removing a $450 car payment frees the whole $450 for housing. Improve your credit score, which buys a better rate tier and, unlike the others, costs nothing but time. Save a larger down payment, which both reduces the loan and, at 20%, removes mortgage insurance entirely — the down payment calculator shows how long that takes.

Two more that are worth naming and easy to get wrong. A longer term lowers the payment and so raises the price you qualify for, at a large cost in total interest — the mortgage calculator prices that trade honestly. And a cheaper county can do more than a raise: a property tax rate two points lower is worth a great deal of price at the same monthly cost.

What does not help is stretching the ratio. Getting approved at the ceiling does not make the house affordable; it makes the lender comfortable.

What this calculator assumes

• A fixed-rate loan held to term, with the rate you entered.
• Federal tax only in the take-home figures — no state or local income tax, and no payroll deductions for retirement, health cover or childcare.
• Property tax as a flat percentage of the price, unchanging. Real assessments move, and some states cap how fast.
• Mortgage insurance for as long as equity is under 20%, at the rate entered. On conventional loans it can usually be removed once you reach 20%; on many FHA loans it lasts the life of the loan.
• No rental income, no bonus or commission income, both of which lenders treat under their own rules.
• Nothing about your savings beyond the down payment. Whether you should spend the cash is a separate question — keep the emergency fund intact.

These are planning estimates, not a pre-approval. A lender’s decision rests on documents, not ratios: pay stubs, tax returns, credit history and an appraisal.

Affordability questions people ask

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