Home Affordability Calculator

Enter your income, debts, and loan terms to find the home price you can reasonably afford - based on the standard 28/36 lending rule, with property tax, insurance, and PMI built directly into the price itself.

Home Affordability Calculator

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Annual gross income

Other monthly debt payments

Down payment (%)

Interest rate (%)

Property tax rate (% of home value/yr)

Insurance rate (% of home value/yr)

Estimated max home price

$356,526

Binding rule

28% front-end

Max loan amount

$285,221

Principal & interest	$1,756.15
Property tax (monthly)	$356.53
Insurance (monthly)	$103.99
PMI (monthly)	$0.00
Total monthly payment (PITI)	$2,216.67

Uses the standard 28/36 rule: housing payment under 28% of gross income, and total debt (housing + other debts) under 36% - whichever is more restrictive.

The formula

Front-end limit = Monthly income x 28% Back-end limit = Monthly income x 36% - Other monthly debts Max housing payment = the SMALLER (more restrictive) of the two Home price = Max housing payment / (Loan fraction x Amortization factor + Tax rate/12 + Insurance rate/12 + PMI factor)

Example

$95,000 income, $500 other debts, 20% down, 6.25% rate, 1.2% tax, 0.35% insurance: the 28% front-end rule is more restrictive ($2,216.67 vs $2,350 back-end) - solving with full PITI built in gives a max home price of $356,526.

Step-by-step guide

Enter your annual gross income and other monthly debts (car loans, student loans, credit cards, etc.).
Enter your planned down payment percentage and interest rate.
Enter your area's typical property tax and insurance rates as a percentage of home value.
Read your estimated max home price, along with the full PITI payment breakdown.

Why this solves for price with taxes and insurance already built in

Property tax and insurance are usually charged as a percentage of the home's value - which creates a chicken-and-egg problem for a naive calculation, since the home price is exactly what you're trying to find. A simpler approach (estimating price from principal and interest alone, then treating tax and insurance as an afterthought) systematically overstates what's actually affordable, because it ignores that a more expensive home also carries a higher tax and insurance bill. This calculator solves the whole equation together, so the price shown already reflects a monthly payment where principal, interest, tax, insurance, and PMI (if applicable) all fit within your true affordability limit.

Common mistakes

Using only the back-end (36%) ratio and ignoring the front-end (28%) limit - many conventional loan programs cap housing costs specifically at 28%, regardless of how much room the 36% total-debt limit would otherwise allow.

Using a national-average property tax rate instead of your specific area's rate - property tax rates vary enormously by location, and this single input can meaningfully shift the realistic price estimate.

Frequently asked questions

What is the 28/36 rule exactly?

It's a widely used conventional lending guideline: housing costs (principal, interest, tax, insurance) shouldn't exceed 28% of gross monthly income, and total debt payments (including housing) shouldn't exceed 36%. Some loan programs allow higher ratios, especially for well-qualified borrowers.

Why does my down payment percentage affect the tax and insurance shown?

A larger down payment means less of your monthly budget goes to principal and interest for the same home price, leaving more room within your affordability limit for a higher-priced home - which in turn means a proportionally higher (but still affordable) tax and insurance bill too.

Where do I find my area's actual property tax rate?

Local county or municipal assessor websites typically publish current effective tax rates - real estate listings also often show the current owner's actual annual tax bill as a useful reference point.

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