CALCSLIP

Home affordability calculator

The most house your income and debts support, and the monthly payment it means.

$
$

Car, student and card payments; not rent

$
% a year
years
Taxes, insurance and lender limits
% of price
$
% of income

Front-end ratio, often 28%

% of income

Back-end ratio, often 36%

Result

Home price you can afford
$353,461
Loan amount
$293,461
Down payment
$60,000
Monthly housing payment
$2,333.33
Principal & interest
$1,854.87
Property tax
$353.46
Home insurance
$125.00
Limit that applies
Housing 28% of income

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How this was calculated

  1. Monthly income

    Yearly income ÷ 12

    $100,000.00 ÷ 12 = $8,333.33

  2. Housing limit

    Monthly income × housing %

    $8,333.33 × 28% = $2,333.33

  3. All-debts limit

    Monthly income × all-debts % − other debts

    $8,333.33 × 36% − $500.00 = $2,500.00

  4. Loan

    L = (H − D × t ÷ 12 − I ÷ 12) ÷ (1 ÷ a + t ÷ 12)

    H = $2,333.33, a = 158.2108 → L = $293,461

  5. Price

    Loan + down payment

    $293,461 + $60,000 = $353,461

What this calculation assumes

  • Lenders commonly cap the housing payment at 28% of gross monthly income and all debt payments at 36%; many allow more. Change the limits under Taxes, insurance and lender limits.
  • The payment includes principal, interest, property tax and insurance. Mortgage insurance, HOA fees and closing costs are not included.
  • This is an estimate of what the ratios allow, not a loan offer. A lender also looks at credit history, savings and the property.

Estimates for information only. They are not financial advice, a loan offer or a guarantee of any return, rate or approval. Lenders and providers calculate with their own terms; check yours before you decide.

In short

Lenders commonly allow a housing payment of up to 28% of gross monthly income and all debts up to 36%. On $100,000 a year with $500 of debts and $60,000 down, at 6.5% for 30 years, that is a home of about $353,461 with a $2,333.33 monthly payment including tax and insurance.

The 28/36 rule

Many lenders cap the housing payment (principal, interest, property tax and insurance) at 28% of gross monthly income, and all debt payments together at 36%. The calculator works out both limits, uses the lower one, and turns that payment into a loan and a price.

Example: on $100,000 a year with $500 of other debts, 28% of monthly income is $2,333.33 and 36% minus the debts is $2,500, so the housing limit applies. With $60,000 down, a 6.5% 30-year loan, 1.2% property tax and $1,500 of insurance, that buys a home of about $353,461: a $293,461 loan at $1,854.87 a month plus $353.46 of tax and $125 of insurance.

Why taxes are solved together with the loan

L = (H − D × t ÷ 12 − I ÷ 12) ÷ (1 ÷ a + t ÷ 12)

Property tax grows with the price, so it cannot be subtracted first. H is the allowed housing payment, D the down payment, t the tax rate, I the yearly insurance and a the annuity factor (1 − (1 + r)^−n) ÷ r. The result is the largest loan whose full payment fits the limit.

Questions people ask

Can I borrow more than this?

Often yes: many loan programs allow a back-end ratio of 43% or more. Raise the limits under Taxes, insurance and lender limits, but a payment you can comfortably carry is usually lower than the maximum a lender allows.

What does not count as debt here?

Rent you will stop paying, utilities, groceries and insurance premiums other than home insurance. Count car loans, student loans, card minimums and support payments.