How this is calculated
budget = min(28% of monthly income, 36% − other debts) × ~75% for principal+interest → loan via amortization → price = loan + down payment
Lenders size mortgages with the 28/36 rule: housing costs at most 28% of gross monthly income (front-end), and all debt payments together at most 36% (back-end). This tool applies both caps, takes the stricter one, reserves roughly a quarter of the housing budget for property taxes and insurance, and converts what's left into a supportable loan at your rate over 30 years. Your down payment then rides on top of the loan to give the price.
Notice how violently the answer moves with interest rates: at 5% the same income supports about 20% more house than at 7%. This is why affordability headlines track rate announcements, and why the rate field deserves a realistic, current number rather than a hopeful one.
Remember that 'the bank will lend it' is not 'you should spend it'. The 28% cap ignores your savings goals, childcare, travel habits and risk tolerance. Plenty of financially comfortable owners deliberately buy at 20-22% of income — the gap between approved and comfortable is where financial breathing room lives.
Frequently asked questions
Is this what a bank would approve?
It's the same guideline framework, applied conservatively. Actual approval depends on credit score, employment history, property type and lender overlays — treat this as the realistic neighborhood, then get pre-approved for the precise figure.
Why do my other debts matter so much?
The 36% back-end cap counts every recurring debt payment. A $400 car payment can reduce your supportable home price by tens of thousands — sometimes paying off a small loan before applying literally buys more house.
How much down payment do I need?
20% avoids PMI, but conventional loans go down to 3-5% and FHA to 3.5% with it. The trade: smaller down payments mean bigger loans, PMI, and thinner equity cushions.