How this calculator works
Lenders typically size a mortgage using two limits at once, commonly called the 28/36 rule. The front-end ratio caps your housing payment — mortgage, taxes, insurance, and HOA combined — at around 28% of your gross monthly income. The back-end ratio caps all your monthly debt, housing included, at around 36%.
This calculator computes both limits and uses whichever one leaves less room, since that's the one a lender would actually enforce. If you already carry a car payment or student loan, the back-end ratio often becomes the binding constraint before the front-end ratio does — that's why paying down other debt can sometimes increase what you can afford more than a lower interest rate would.
Once your maximum monthly housing payment is set, the calculator works backward: it splits that payment into property tax, insurance, HOA, and whatever's left for principal and interest, then solves for the loan amount that payment supports at your mortgage rate and term. Add your down payment back in, and that's your maximum home price.
What this doesn't account for
Real underwriting also weighs your credit score, employment history, cash reserves, and the specific lender's own overlays on top of standard ratios — any of which can move your actual approved amount up or down from this estimate. Treat this as a planning number, not a pre-approval.
Frequently asked questions
What is the 28/36 rule?
It's a common lender guideline: your housing payment shouldn't exceed 28% of your gross monthly income (the front-end ratio), and your total debt payments, including housing, shouldn't exceed 36% (the back-end ratio). This calculator uses both limits and picks whichever is more restrictive.
Why is my affordable home price lower than expected?
Existing monthly debts, like a car loan or student loan payment, reduce the room left under the back-end ratio for housing costs. Property tax and insurance also count against your monthly housing budget alongside the mortgage payment itself, which lowers the loan amount you can support.
Does this replace mortgage pre-approval?
No. Lenders factor in your credit score, employment history, assets, and their own underwriting rules, which can move the number up or down from this estimate. Treat this as a starting point for budgeting, not a guarantee of what you'll be approved for.