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Estimate the maximum home price you can afford based on income, debts, and the 28/36 rule.
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Using the 36% rule, subtract your other monthly debts from 36% of gross monthly income to find your maximum mortgage payment, then work backward with your rate and term to find the maximum loan amount, and add your down payment for the maximum home price.
Max Payment = (Gross Monthly Income × 36%) − Other Monthly Debts
The 28/36 rule is a widely used affordability guideline: your monthly housing costs (principal, interest, taxes, insurance) shouldn't exceed 28% of your gross monthly income, and your total debt payments, including housing, shouldn't exceed 36%. Lenders use similar debt-to-income thresholds when underwriting mortgages, though the exact limits vary by loan program and lender.
Because the 36% ceiling covers total debt, not just housing, any existing monthly obligations, car payments, student loans, credit card minimums, directly reduce how much of that 36% is left available for a mortgage payment. Paying down other debts before applying for a mortgage can meaningfully increase the home price you qualify for.
Once you know your maximum affordable monthly payment, the calculation works in reverse from a standard mortgage amortization formula: given an interest rate and loan term, that monthly payment supports a specific maximum loan amount. Adding your down payment to that loan amount gives the maximum home price.
This calculator approximates affordability based on income and existing debt, but it doesn't include property taxes, homeowners insurance, HOA fees, or PMI (private mortgage insurance, typically required with a down payment below 20%), all of which affect your true monthly housing cost. Use the Mortgage Calculator for a full PITI breakdown once you've settled on a target price range.
The 28/36 rule suggests your housing costs shouldn't exceed 28% of gross monthly income, and your total debt payments (including housing) shouldn't exceed 36% of gross monthly income. Lenders use similar ratios to determine loan eligibility.
A common estimate takes 28% of your gross monthly income as your maximum housing payment, then works backward using current mortgage rates and your down payment to determine the maximum home price that payment supports.
Yes. Lenders look at your total debt-to-income ratio, so existing monthly debts like car loans, student loans, and credit card minimums reduce the housing payment you can qualify for under the 36% total debt limit.
Get a full payment breakdown with the Mortgage Calculator, or check your debt-to-income ratio with the DTI Calculator.
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