How much house can I afford?
Affordability is really two questions: the largest loan a lender will approve, and the largest payment you can live with month to month. The first follows a formula; the second depends on the rest of your budget. This guide walks through both.
Last reviewed August 2026
The 28/36 rule
Almost every conventional lender sizes your loan from two debt-to-income ratios. The front-end ratio compares your full housing payment — principal, interest, taxes, insurance, and any HOA dues — to your gross monthly income, and it should land at or below 28%. The back-end ratio adds every other debt payment: car loans, student loans, and minimum credit-card payments. It should stay at or below 36%.
Your borrowing limit is whichever of the two ceilings binds first. Someone with no other debt is usually capped by the 28% housing rule. Someone with a large car payment often hits the 36% total-debt rule well before that, which is why paying down a car loan can raise a pre-approval more than a raise would.
The four inputs that move the number
- Income — the denominator in both ratios. Only reliable, documentable income counts.
- Existing debt — every $200/month of other payments knocks roughly $30,000–$40,000 off the price you qualify for at today's rates.
- Interest rate — a one-point rate move changes the payment on a $400,000 loan by about $250/month, which reshapes the whole calculation.
- Down payment — a bigger down payment shrinks the loan directly and, at 20%, removes private mortgage insurance from the housing figure.
Property taxes and insurance are the quiet variables. Two identical incomes shopping identical prices can qualify for very different loans if one is buying in a 2% property-tax county and the other in a 0.5% county.
Run your numbers
The affordability calculator applies the 28/36 rule to your exact income, debts, down payment, rate, and an estimate of monthly taxes and insurance, then inverts the mortgage formula to a maximum price and loan amount.
Open the home affordability calculator →
Then pressure-test it. Rebuild the same monthly payment in a budget that also includes retirement savings, an emergency fund, childcare, and travel. If the payment only fits when nothing goes wrong, borrow less than the maximum.
Terms in this guide
- Debt-to-income ratio (DTI) — The share of your gross monthly income consumed by debt payments. Lenders look at two versions: front-end (housing only) and back-end (all debt). It is the single biggest lever in how much a lender will let you borrow.
- Front-end DTI — The full monthly housing payment — principal, interest, taxes, insurance, and any HOA dues — divided by gross monthly income. Conventional guidance keeps this at or below 28%.
- Back-end DTI — Total monthly debt payments — the full housing payment plus car loans, student loans, and minimum credit-card payments — divided by gross monthly income. Conventional underwriting generally wants this at or below 36%, with some programs allowing 43–50%.
- PITI — Principal, Interest, Taxes, and Insurance — the four parts of a typical monthly mortgage payment when taxes and insurance are escrowed. Lenders use PITI, plus any HOA dues, as the housing figure in your DTI.
- Down payment — The portion of the purchase price you pay in cash up front. A larger down payment lowers the loan amount, can eliminate mortgage insurance at 20%, and often earns a slightly better rate.