How this calculator works
Lenders size mortgages with the 28/36 rule: your housing payment (principal, interest, taxes, and insurance) should stay under 28% of gross monthly income, and all debt payments together - housing plus car loans, student loans, and minimum card payments - under 36%. This calculator takes whichever limit is tighter for you, then works backwards from that monthly budget to a home price, accounting for your down payment and the ongoing tax and insurance cost that scales with the home's value.
price = down payment + (budget − down × t) ÷ (k + t)
Here k is the monthly mortgage-payment factor for your rate and term, and t is monthly tax and insurance as a fraction of the home's value. Note what the result leaves out: PMI if you put less than 20% down, HOA dues, and maintenance (often estimated at 1% of the home's value per year). Treat the output as a ceiling, not a target.
Frequently asked questions
What is the 28/36 rule?
A lending guideline that says your housing payment should stay under 28% of gross monthly income, and all debt payments combined - housing plus car loans, student loans, and credit cards - should stay under 36%. This calculator uses whichever limit is tighter for you.
How does my down payment change what I can afford?
Every extra down-payment dollar adds roughly a dollar of home price without raising your monthly payment, since it doesn't need to be borrowed. A larger down payment also helps you avoid PMI (usually required below 20% down) and can earn a slightly better rate.
Should I spend as much as my bank pre-approves?
Usually not. Pre-approvals measure the most a lender will risk, not what leaves room in your budget - they often stretch past the 28/36 guideline and ignore childcare, savings goals, and maintenance. Many buyers are more comfortable spending 10-20% below their pre-approval amount.