Find out how much house you can afford and see a complete breakdown of your estimated monthly payment.
The most widely used guideline for home affordability is the 28/36 rule. This rule states that your monthly mortgage payment (including taxes and insurance) should not exceed 28% of your gross monthly income, and your total monthly debt payments (mortgage plus all other debts) should stay under 36% of gross monthly income.
This calculator uses the 28/36 rule as its foundation, taking your income, existing debts, down payment, interest rate, and property costs to estimate the maximum home price you can comfortably afford. It also provides a full breakdown of what your monthly payment would look like.
Your monthly mortgage payment consists of four components, often referred to as PITI:
Principal is the portion of your payment that reduces the actual loan balance. Early in the loan, most of your payment goes toward interest, but over time a larger share goes to principal.
Interest is what the lender charges you for borrowing the money. The interest rate you qualify for depends on your credit score, down payment, loan type, and market conditions.
Taxes are property taxes assessed by your local government, typically between 0.5% and 2.5% of the home's value per year. Most lenders collect these monthly and hold them in an escrow account.
Insurance includes homeowners insurance (required by lenders) and possibly private mortgage insurance (PMI) if your down payment is less than 20% of the home's value.
Your down payment directly affects how much house you can afford and your monthly payment. A larger down payment means a smaller loan, lower monthly payments, and potentially a better interest rate. Putting down at least 20% also eliminates the need for PMI, which typically costs 0.5% to 1% of the loan amount per year.
For example, on a $300,000 home, PMI at 0.75% would add about $187 per month to your payment. Over the life of the loan, that adds up significantly. If you can reach the 20% threshold, the savings are substantial.
Your debt-to-income (DTI) ratio is the percentage of your gross monthly income that goes toward debt payments. Most lenders prefer a DTI of 36% or lower for conventional loans, though some FHA loans allow up to 43% and certain special programs may go higher. A lower DTI not only helps you qualify for a mortgage but also gives you more financial breathing room for unexpected expenses.