By David Chen · Published September 26, 2026
Why this one works backwards
Almost every mortgage calculator starts with a house price. That is the wrong end to start from, because at the moment you start looking you do not know the price — that is the thing you are trying to find out. If you begin with a listing, you have already made a decision about your budget without doing any of the arithmetic.
The order that actually reflects the decision is: income, then the monthly payment you can commit to, then the price that payment supports. This calculator runs that sequence. It is the mirror image of the mortgage calculator, which takes a price and tells you the payment that follows from it.
The two ceilings a lender applies
Mortgage underwriting works from ratios. The front-end ratio caps housing costs as a share of gross monthly income. The back-end ratio caps all debt — housing plus car loans, student loans, minimum card payments — as a share of the same income. The long-standing convention is 28% and 36%.
Many loans are now underwritten to wider limits, commonly 36% and 43%, and some programmes go further. That difference is not small. On the same income of $100,000, the same $500 of monthly debts and the same $60,000 down payment:
| Ceiling | Affordable price | Loan | Principal & interest | Total housing cost |
|---|---|---|---|---|
| 28% housing / 36% total debt | $334,427 | $274,427 | $1,734.56 | $2,333.33 |
| 36% housing / 43% total debt | $420,589 | $360,589 | $2,279.17 | $3,000.00 |
6.50% over 30 years, 1.2% property tax, $1,800 insurance a year, mortgage insurance at 0.5%. Produced by our calculator and independently recomputed.
Moving from the conservative ceiling to the wider one adds $86,162 to the price you can carry. Nothing about your circumstances changed — only the rule being applied. This is worth sitting with, because it means a figure described as “how much you can afford” is really a statement about a lender's appetite, not about your finances.
What the monthly number has to carry
The loan repayment is only one line in the payment. Taking the conservative case above — a $334,427 home with $60,000 down at 6.50% — here is what the $2,333.33 monthly housing cost is made of:
| Component | Per month | Share of total |
|---|---|---|
| Principal and interest | $1,734.56 | 74.3% |
| Property tax (1.2% a year) | $334.43 | 14.3% |
| Home insurance ($1,800 a year) | $150.00 | 6.4% |
| HOA fee | $0.00 | 0.0% |
| Mortgage insurance (0.5% a year) | $114.34 | 4.9% |
Property tax and insurance are inputs, not assumptions — substitute your own county's rate and your own premium.
Principal and interest is under three-quarters of the bill, and the remaining quarter has nothing to do with the loan: it is the ongoing cost of owning the property. Two of those lines scale with the price rather than the loan, which is why a more expensive house costs more than the extra borrowing alone would suggest, and one — mortgage insurance — exists only because the down payment is below 20%.
The down payment has a cliff at 20%
It is tempting to think of down payments as a dial that moves affordability smoothly. They do not. Holding income at $100,000, monthly debts at $500 and the rate at 6.50%, and changing only the cash available:
| Down payment | As % of price | PMI applies | Affordable price |
|---|---|---|---|
| $40,000 | 12.6% | Yes | $317,011 |
| $60,000 | 17.9% | Yes | $334,427 |
| $80,000 | 21.8% | No | $367,314 |
| $100,000 | 26.0% | No | $384,582 |
28/36 limits throughout. The loan term, rate, tax rate and insurance are held constant.
Look at the middle two rows. Adding $20,000 to a $60,000 down payment raises the affordable price from $334,427 to $367,314 — a gain of $32,887, which is 1.6 times the money added. Now look at the first two rows: the same $20,000 added to a $40,000 down payment buys only $17,416 of extra house.
The reason is in the third column. Below 20% down, mortgage insurance is charged on the loan amount and consumes part of the debt-to-income allowance that would otherwise support borrowing. Crossing 20% removes that charge, and the freed allowance is spent on the loan instead. The benefit of saving is therefore concentrated at the threshold, which is the opposite of how most people plan for it — if you are already close to 20%, getting there is worth considerably more than the arithmetic suggests.
The lender's maximum is not your maximum
A lender approving a loan at 43% of gross income is making a statement about expected default risk, not about whether the payment leaves you with a life. Gross income is not spendable income — tax comes off first, and the ratio is calculated on the figure before it does.
Twenty-eight percent of gross income on housing typically lands somewhere near a quarter of take-home pay. Anything approaching 36% of gross is a much larger share of what actually arrives in your account, and the remainder has to absorb food, transport, utilities, savings, insurance and everything unexpected. A useful discipline is to treat the number this calculator produces as a ceiling and to buy below it deliberately, because the payment is fixed for thirty years while almost everything else about your budget is not.
What this calculator leaves out
It models the monthly cost of the loan and the property. It does not model the cash you need on the day you buy, which is a separate and frequently under-planned number:
- Closing costs. Origination, appraisal, title insurance, recording and prepaid items commonly run 2% to 5% of the purchase price, paid in cash alongside the down payment.
- Moving and setup. Moving, a security deposit, blinds, a fridge, a mattress — the ordinary cost of making a house liveable is not part of any mortgage calculation.
- Maintenance. A common planning figure is around 1% of the property value a year. On a $334,000 home that is roughly $3,300 annually, or $275 a month, on top of everything above.
- A cash reserve. Spending every available dollar on the down payment leaves nothing for a roof, a boiler or a change in income. Three to six months of expenses held back is the usual guidance, and it is not negotiable in the first year of ownership.
If squeezing the down payment to its maximum leaves you without the reserve or the closing costs, the house is not affordable at that price — whatever a ratio says.
A worked example, end to end
Take a household earning $100,000 with $500 a month going to existing debts and $60,000 in cash. Applying the conservative 28/36 limits at 6.50% over 30 years:
- Gross monthly income is $8,333.33; 28% of it is $2,333.33 a month for housing.
- Comparing the two ceilings, the housing limit binds first — the total-debt limit would have allowed more, so other debts are not the constraint here.
- Working backwards from $2,333.33 after property tax and insurance leaves room for a loan of about $274,400.
- With $60,000 down, the affordable price is about $334,400 — and because that is 17.9% down, mortgage insurance of $114.34 a month is included in the figure.
- Rerunning the same numbers under 36/43 gives roughly $420,600. Both answers are correct; they answer different questions.
Change the rate, the term or the tax rate and the answer moves — those inputs are in the panel above precisely so you can see by how much, rather than trusting a single headline figure. To check what any resulting loan would cost month by month, take the numbers to the amortization schedule.
Next steps
Once you have a price, the two remaining decisions are the term and the rate. The term changes both the payment and the total cost dramatically — see 15-year vs 30-year mortgages for what that trade-off looks like on a worked loan, and how much house you can afford for the parts of the decision a ratio cannot capture.
Frequently asked questions
How much house can I afford on $100,000 a year?
On a $100,000 income with $500 of monthly debt payments, $60,000 down and a 6.5% rate, the 28/36 convention supports a home price of about $334,400 — of which roughly $274,400 is borrowed. The same numbers under the wider 36/43 limits support about $420,600. The gap between those two figures is the whole point of this page: affordability depends on which ceiling you choose to live under, not only on your salary.
What is the 28/36 rule?
It is a long-standing convention in mortgage underwriting. The first number is the share of gross monthly income that housing costs may take — principal, interest, property tax, insurance, mortgage insurance and HOA dues combined. The second is the share that all debt may take, housing included. A lender comparing your file to 28/36 is asking whether a third of your income is already committed before you buy anything else.
Should I put 20% down?
Twenty percent is the point at which mortgage insurance normally stops applying, so the monthly cost falls and the amount you can borrow rises. The worked example on this page shows what that is worth: adding $20,000 to a $60,000 down payment raises the affordable price by about $32,900, which is far more than the $20,000 itself. Below 20% the benefit of each extra dollar is smaller, so the strongest reason to keep saving is the threshold, not the ratio.
Why does a larger down payment let me afford a more expensive house?
Two effects compound. The obvious one is that you borrow less for the same price, so the payment is smaller. The less obvious one is that crossing 20% removes mortgage insurance, which was consuming part of the debt-to-income allowance you could otherwise spend on the loan. Because the down payment also changes the price ceiling itself, the relationship is not linear — it is steep right around the 20% line.
Does this calculator include closing costs?
No. Closing costs — origination fees, appraisal, title insurance, recording fees and prepaid tax and insurance — are typically 2% to 5% of the purchase price and are paid in cash at closing, on top of the down payment. If you spend every available dollar on the down payment there is nothing left for them, which is one reason to hold back a reserve rather than maximising the number this page produces.
Other calculators
- Mortgage calculator — Monthly payment with property tax, home insurance, HOA and PMI folded in — the number that actually leaves your account, not just principal and interest.
- Auto loan calculator — Work out the amount financed from price, down payment, trade-in and sales tax, then see what the monthly payment really costs over 48, 60 or 72 months.
- Personal loan calculator — Unsecured borrowing at the rates lenders actually quote, with the origination fee maths that decides whether the money is worth taking.
- Student loan calculator — Payment and total interest on a student loan, plus what a modest extra monthly payment does to the payoff date — the cheapest interest saving there is.
Guides that go with it
- How much house can I afford? — Why the price a lender approves is not the price you should pay, how the debt-to-income rules work, and what the monthly figure has to cover beyond principal and interest.
- 15-year vs 30-year mortgage — The same loan on both terms, side by side: what the shorter term saves, what it costs each month, and the affordability test that decides it.
- How to compare loan offers — Why the headline rate is not the comparison, the three numbers that are, and how to work out whether discount points are worth paying.
This calculator is educational and is not financial advice, and its output is an estimate — lenders apply their own fees, rounding rules and day-count conventions. Every figure was produced by the same calculator code and independently recomputed before publication. Spot an error? Tell us — see also our disclaimer.