How much house can you afford?
Lenders do not use a salary multiple. They cap two debt-to-income ratios and whichever one you hit first becomes your ceiling. This affordability calculator runs both, solves backwards for a purchase price, and names the limit that is actually holding you back. This page is for first-time buyers and anyone sizing up a first rental. Nothing is saved, and there is no email wall.
A home at this price puts your housing payment at $1,983 a month, right at your front-end limit.
Principal, interest, taxes, insurance, HOA, and PMI combined.
Your income caps you before your other debts do.
28% of gross monthly income.
43% of income, less your $450 of other debt.
Below 20%, so PMI is included in the payment above.
Estimates only, for education. This is the ratio math a lender runs, but a real approval also weighs credit score, employment history, reserves, and the loan program. Get a pre-approval before you shop. Comfortable and approvable are not the same number, and buying at your ceiling leaves no room for repairs.
How much house can I afford?
Take your gross monthly income and multiply by 28% for the housing-payment ceiling, then by 43% and subtract your other debt payments. The lower figure is your maximum payment. Work backwards from it, including taxes, insurance and PMI, to get your price.
Key takeaways
- Two ratios decide it: front-end (housing only) and back-end (housing plus all other debt).
- Fannie Mae allows up to 50% total DTI through Desktop Underwriter, far above the classic 36% guideline.
- The payment lenders test is full PITI: principal, interest, taxes, insurance, HOA and PMI, not just principal and interest.
- Property tax rates range from under 0.5% to over 2% of value a year, which can move your maximum price by six figures.
How lenders decide what you can afford
A lender is not asking what you can comfortably manage. It is asking what share of your gross income your obligations consume, and it tests that twice.
The front-end ratio is your housing payment divided by gross monthly income. The classic guideline is 28%. The back-end ratio adds every other monthly debt payment: car loans, student loans, minimum credit card payments. The Consumer Financial Protection Bureau notes that different loan products and lenders set different DTI limits, so there is no single national cap.
The important detail is that the housing payment in both ratios is the full PITI: principal, interest, property taxes, homeowners insurance, HOA dues, and mortgage insurance if you put down less than 20%. People budget for principal and interest, then find the real payment is several hundred dollars higher.
That is also why this calculator solves for price by iteration rather than a formula. Property tax and PMI both depend on the price you are trying to find, so there is no clean algebraic answer.
What DTI limits actually apply
The 28/36 rule is widely repeated and considerably stricter than what most lenders will actually approve. Fannie Mae's Selling Guide sets out the real conventional limits:
| Underwriting path | Maximum total DTI |
|---|---|
| Desktop Underwriter (automated) | 50% |
| Manual underwriting, standard | 36% |
| Manual, with credit score and reserves | 45% |
Those figures come from Fannie Mae Selling Guide section B3-6-02. The calculator defaults to 43% on the back end as a middle position between the conservative guideline and the automated ceiling. Move it to see how much of your budget is really a policy choice rather than a law of nature.
Approvable and advisable are different questions. A 50% DTI approval means half your gross income is committed before you buy groceries.
How to raise your number
The binding limit tells you where to spend your effort, and this is the part most affordability calculators leave out.
- If the back-end ratio binds, your other debts are the constraint. Paying off a car loan raises your budget faster than saving another few thousand for the down payment.
- If the front-end ratio binds, income is the constraint and clearing debt will not move the number at all.
- Property tax is the sleeper variable. Identical homes at the same price in different counties can differ by hundreds a month once taxes are in the payment. Look up the real rate for the county you are shopping.
- Crossing 20% down removes PMI, which frees room under the same ceiling and buys more house with the same payment.
Once you have a number, the useful question is whether the property can help carry itself. The house hacking calculator shows what changes when a tenant covers part of the payment, and FHA vs conventional covers how the loan choice changes your down payment. Before you shop, read how pre-approval actually works.
Frequently asked questions
How much house can I afford on my salary?
Lenders do not use a salary multiple. They cap two ratios: your housing payment against gross income, and your housing payment plus all other debt against gross income. Whichever you hit first sets your ceiling. Enter your income, debts, and down payment above to see the resulting price.
What is the 28/36 rule?
Keep housing at or under 28% of gross monthly income and total debt at or under 36%. It is a conservative guideline, not a lender rule. Fannie Mae allows up to 50% total DTI through Desktop Underwriter, so being approved for far more than 36% is common.
What is the maximum DTI to buy a house?
For conventional loans run through Fannie Mae's Desktop Underwriter, the maximum is 50%. Manually underwritten loans cap at 36%, rising to 45% if you meet credit score and reserve requirements. Other programs differ, so treat 50% as a ceiling rather than a target.
Do car payments affect how much house I can buy?
Substantially. Every dollar of monthly debt payment comes straight out of your back-end ceiling. A $450 car payment can cut your maximum price by roughly $60,000 to $75,000 at current rates, so clearing it before applying is often the fastest way to raise your budget.
Should I buy at the top of what I am approved for?
Usually not. The approval ceiling is what a lender will risk, not what leaves you room for a roof replacement or a job change. Buying meaningfully under your maximum is what keeps a home from becoming a source of stress, and what makes a later investment purchase possible.
Related calculators
- First Deal Cash PlannerThe cash side of the same question: down payment, closing costs, and reserves across six loan types.
- Rent vs Buy CalculatorWhether buying beats renting at all, and the year it starts to.
- Closing Costs CalculatorThe cash you need at the table on top of the down payment.
- House Hacking CalculatorYour real housing cost once a tenant covers part of the payment.
- DSCR Loan CalculatorFor an investment property, where the rent qualifies you instead of your income.
Sources
- Fannie Mae Selling Guide B3-6-02, Debt-to-Income Ratios · Maximum DTI of 50% through Desktop Underwriter; 36% manual, up to 45% with compensating factors
- Consumer Financial Protection Bureau, What is a debt-to-income ratio? · Definition of DTI and confirmation that limits vary by loan product and lender
Know your number. Now know the order.
The 28-day course takes you from a budget to a lender to a closed deal, with a lesson and a task every day. Or grab the free strategy guide to find the path that fits you.