Why "approved" and "comfortable" are different numbers
This calculator applies the 28/36 rule most conventional lenders use — your housing payment capped near 28% of gross income, and your total debt (housing plus everything else) capped near 36%. That tells you what you'd likely qualify for.
It doesn't know about your other goals — saving, travel, retirement contributions. Many people are more comfortable using 20-25% of income for housing instead of the full 28%, to leave room for everything else.
How home affordability is actually calculated
Affordability isn't a single formula — it's a ceiling set by whichever of two limits you hit first. Lenders calculate both, then use the lower number.
On a $100,000 household income, that means roughly $2,333/month for housing (the 28% front-end limit), and $3,000/month for housing plus every other debt payment combined (the 36% back-end limit). Working backward from whichever limit binds — after subtracting property tax and insurance — gives you the loan you can support, and from there the home price.
A nuance most affordability explainers miss
Existing debt doesn't reduce your maximum price gradually. It does nothing at all until it pushes you past the back-end limit — then it bites hard. On a $100,000 income at 6.5% with 20% down:
Up to about $667/month in other debt, the 28% housing limit is what constrains you — so paying off a small car loan changes nothing. Past that point, the 36% total-debt limit takes over, and every additional dollar of debt directly reduces what you can buy. This is why "should I pay off my car before buying?" has a real answer, and it depends on which side of that line you're on.
What actually moves your number most
Three inputs dominate, and they don't move it equally. Same $100,000 income, same $400/month in other debts:
Large impact
At 5.5%: $399,943. At 6.5%: $359,270. At 7.5%: $324,769. A two-point rate swing moves your ceiling by about $75,000.
Large impact
5% down: $302,543. 10% down: $319,351. 20% down: $359,270. More down means both a bigger budget and no PMI eating your monthly limit.
Threshold impact
No effect until you cross the back-end limit — then significant. Worth checking where you actually sit before paying anything down.
Location-dependent
Tax and insurance come out of your housing limit before the loan is calculated — so the same income buys meaningfully less house in a high-tax county.
Approved vs. comfortable: the number lenders won't give you
Everything above describes what a lender will approve. It's not a recommendation. The 28/36 rule is a risk threshold for the lender, calculated on gross income — before taxes, retirement contributions, health insurance, childcare, or anything else that actually leaves your account each month.
We cover how to actually decide that number — including the ownership costs no approval calculation includes — in How Much House Can You Actually Afford?
Plenty of financial planners suggest targeting meaningfully below the maximum — often closer to 25% of gross income for housing — specifically to leave room for saving, emergencies, and the maintenance costs that come with owning rather than renting. Running the calculator at both your maximum and a more conservative figure is usually more informative than either number alone.
What this calculator doesn't include
- HOA dues, which lenders do count toward your housing ratio and can meaningfully reduce your ceiling in condo or planned communities.
- Closing costs, typically 2–5% of the purchase price, which come out of your cash at closing rather than your monthly budget.
- Maintenance and repairs, which no lender counts but every homeowner pays — a common rule of thumb is 1% of home value annually.
- Your actual approved rate, which depends on your credit tier, loan type, and lender — the rate you enter here is an assumption, not a quote.
Read the full guide: How Much House Can You Actually Afford? →