House Affordability Calculator
Find out what house price your income supports, using the same front-end and back-end debt ratios lenders apply.
How to use this calculator
- 1Enter gross household income before tax, including any co-borrower.
- 2Add up the monthly minimums on every other debt — car, student, credit cards. Leave out utilities and groceries.
- 3Adjust the ratio limits if you know your lender’s. FHA and some programmes allow up to 43–50% back-end.
- 4Read the binding-ratio note. It tells you whether more income or less debt is the faster route to a bigger budget.
How the calculation works
Housing budget = min( Income × front-end , Income × back-end − other debts )
Price = (Budget − insurance − HOA + a·Deposit) / (a + tax rate/12) where a = i / (1 − (1+i)⁻ⁿ)- front-end
- Housing costs as a share of gross monthly income — conventionally 28%
- back-end
- All debt including housing as a share of income — conventionally 36%
- a
- Monthly payment per unit of loan (the annuity factor)
The two ratios are evaluated separately and the *lower* budget wins, because a lender applies both. Calculators that use only the front-end ratio systematically overstate borrowing power for anyone with a car loan.
Property tax scales with the house price, so price appears on both sides of the equation. Rearranging gives the closed form above rather than needing iteration.
Worked example
$90,000 income, $500 of other debt, $60,000 deposit at 6.5%
- 1.Monthly income is $90,000 ÷ 12 = $7,500.
- 2.Front-end cap: 28% of $7,500 = $2,100. Back-end cap: 36% of $7,500 = $2,700, minus $500 of debt = $2,200.
- 3.The front-end ratio is lower, so the housing budget is $2,100 a month.
- 4.Take off $150 of insurance, leaving $1,950 for principal, interest and property tax.
- 5.Solving for price with a $60,000 deposit gives roughly $335,000.
Result: About $335,000
What "affordability" means to a lender
When a mortgage lender asks whether a home is affordable, it is not asking whether the payment feels comfortable — it is asking whether your income, measured against a fixed set of ratios, supports the payment at all. Those ratios are underwriting rules, built to protect the lender against default, not a judgment about your actual budget or goals.
That distinction matters because the maximum a lender will approve and the amount that leaves you financially comfortable are frequently two very different numbers. This calculator reproduces the lender’s math so you can see the ceiling clearly, separate from the question of whether you would want to borrow that much.
The two ratios that set the ceiling
Underwriting for a home loan generally applies two debt-to-income ratios, and both have to pass.
- Front-end ratio — housing costs alone — principal, interest, tax, insurance and any association fee — measured as a share of gross monthly income.
- Back-end ratio — every recurring debt payment combined, housing included, as a share of gross monthly income. This is the broader test, and it is usually the one that binds for anyone carrying a car loan, student loan or significant credit card balance.
What counts as debt in the calculation
The back-end ratio only counts recurring, contractual debt obligations — the kind that shows up on a credit report. It typically includes things like car loans, student loan payments, minimum credit card payments and any other instalment or revolving debt. It does not include ordinary living costs.
- Included: car loans, student loans, personal loans, minimum credit card payments, child support or alimony obligations, other mortgages.
- Not included: utilities, groceries, insurance on anything other than the home, subscriptions, and other everyday spending — even though these are just as real a claim on your income.
Approved is not the same as comfortable
A lender’s ratios assume nothing goes wrong: no job change, no medical bill, no new cost that was not already in the calculation when the loan was approved. They also do not ask whether you are still saving for retirement, building an emergency fund, or funding anything else that matters to you — approval and comfort are simply different questions.
Because of that gap, many financial planners suggest treating a lender’s maximum as a ceiling to stay well under, rather than a target to reach — with the right cushion depending entirely on your own savings goals, job stability and other financial obligations.
What this assumes, and where it stops
Assumptions
- A fixed-rate, fully-amortising mortgage over the full term.
- Gross income is stable and documentable — lenders average variable income over two years.
- The ratio limits entered reflect your lender’s actual underwriting.
Limitations
- Does not model credit score, which affects both the rate offered and whether you qualify at all.
- Mortgage insurance below a 20% deposit is flagged but not added to the payment.
- Closing costs, moving costs and reserves are not deducted from the deposit figure.
- Approval is not affordability. This shows what a lender permits, not what leaves you comfortable.
Common questions
What is the 28/36 rule?
A long-standing underwriting guideline: housing costs should stay under 28% of gross monthly income, and all debt payments under 36%. Both must pass, so whichever gives the smaller budget is the one that binds. Some programmes stretch the back-end figure to 43% or beyond.
Should I borrow the maximum?
Usually not. The maximum is the lender’s risk limit, not a recommendation. It assumes your income holds, nothing breaks, and you need no savings. Many people are far more comfortable at 70–80% of the number this produces.
Why does a small rate change move my budget so much?
Because the payment is fixed by your income, so a higher rate buys less principal. On a 30-year loan, one percentage point typically moves borrowing power by around 10%. The table above shows it for your own figures.
Sources
- How much can I afford to borrow? — US Consumer Financial Protection Bureau
Formula and content last reviewed on .
Results are estimates for information only, not professional advice.
Related calculators
Tools people commonly use alongside the house affordability calculator.