House Affordability Calculator

Gross monthly income as the foundation of your range

The calculator uses Gross Monthly Income (before taxes) as its starting point, which is the same base lenders use. For a buyer earning $72,000 a year, that is $6,000 gross monthly. At the 28% housing ratio guideline, the maximum PITI — principal, interest, taxes, and insurance — comes out to $1,680 per month. Working backward from that payment ceiling at current rates is how the recommended purchase price is derived.

Joint applications use combined gross income. If two people are buying together, enter the household total in this field. The full income earner picture determines the ceiling; the debt picture narrows it back down. One high income with large monthly debts can produce a lower recommended price than a moderate dual income with no debts — the ratio is what matters, not the raw number.

What the 28% rule actually means in 2026

The 28% housing ratio dates from an era when rates were lower and incomes went further against home prices. In 2026, buyers in many metros find the 28% recommended price is well below what anything decent sells for. The calculator reports both the recommended price and the max approval precisely because of this tension — it is showing you the financially conservative target and the outer edge of what a bank will do, so you can make a conscious decision about where in that range to aim.

Buyers who buy near max approval are accepting higher housing cost as a percentage of income, which creates less room for savings, emergency expenses, and lifestyle choices. That is not automatically wrong — a buyer in a rapidly appreciating market who locks in equity early may come out ahead. But the trade-off should be a deliberate choice, not something that happens because no one ran the math before the offer.

Property tax rate: the input buyers most often get wrong

Property Tax Rate is entered as a yearly percentage of home value. In high-tax states like New Jersey, Illinois, and Connecticut, annual property taxes can run 2–2.5% of assessed value. In low-tax states like Hawaii, Alabama, and Colorado, effective rates can be well under 0.5%. On a $350,000 home, the difference between a 0.5% and a 2.2% property tax rate is about $490 per month in your PITI — which is enough to drop your recommended purchase price by $60,000–80,000.

Buyers who use a national average rate when their county runs significantly higher tend to underestimate their true monthly payment by several hundred dollars. The tool's property tax input is specifically designed for this. Look up your county's effective tax rate before running the calculator — county assessor websites usually publish this directly — and plug in the real number rather than a guess.

Down payment and how it shifts the ceiling

Down Payment Saved directly lowers the loan amount and, past 20%, eliminates PMI. A buyer with $60,000 saved going into a $350,000 purchase has a 17% down payment — close but not over the PMI threshold. Adding $11,000 more to hit 20% down saves roughly $100–175 per month in PMI that would otherwise continue for years. The question of whether to delay the purchase to save more or buy now at the lower down payment is partly financial and partly about where rates and prices are heading.

The calculator lets you run scenarios quickly: change the down payment, watch the max approval move, and see how the recommended price changes as a result. Buyers who think they are far from their target sometimes find that their savings are within a realistic timeline of crossing a meaningful threshold.

Interest rate sensitivity: how one point changes your range

Interest Rate (APR) moves your monthly payment more than any other input in this calculator. A one-percentage-point rate difference on a $300,000 loan over 30 years changes the monthly principal and interest payment by roughly $180–200. That translates to a $20,000–25,000 difference in what loan amount fits inside a given monthly payment ceiling.

If you have been quoted a specific rate or are expecting to buy within a certain rate environment, enter that number rather than the current average. Buyers who ran this calculator at 4% rates in 2021 and revisit it at 7% today often find their recommended price has dropped $60,000–80,000 on the same income — not because their finances changed, but because rate changes really are that consequential. The tool makes that sensitivity visible so you can plan around it rather than be surprised.

The 28% front-end rule versus the 36/43% back-end DTI lenders actually underwrite to

The 28% housing ratio this calculator uses as its 'recommended price' is a front-end ratio — housing costs alone against gross income. It is intentionally conservative. What a lender actually approves is closer to a back-end debt-to-income (DTI) ratio: conventional loans commonly allow up to 36% of gross income across housing plus all other debt, and many programs (FHA in particular) stretch to 43% or higher with compensating factors like strong credit or reserves. That gap is exactly why this tool reports both a recommended price and a max-approval price rather than a single number — the 28% line and the lender's 36/43% ceiling are answering two different questions.

A buyer with no car payment, no student loans, and no credit card balances can often absorb a higher back-end DTI safely, because 28% of their income covers effectively all of their debt. A buyer carrying a $500/month car payment and $300/month in student loans has already spent a chunk of that 36-43% ceiling before the mortgage is added — their true house budget is lower than the max-approval figure implies, even though the bank might approve it. Add up your non-housing monthly debt separately and subtract it from the DTI ceiling before assuming the max-approval number is really available to you.

House Affordability Calculator vs. the alternatives

How to use it

1. Enter Gross Monthly Income (before taxes) — use the combined household figure if buying with a partner.
2. Enter Down Payment Saved — your actual available cash, not a future savings target.
3. Set Interest Rate (APR) to the current market rate or your quoted rate.
4. Enter Property Tax Rate (yearly % of home value) using your target county's actual effective tax rate.
5. Enter Insurance (yearly) as an estimated annual premium, then read the Recommended Price, Max the Bank Will Approve, and the 28% Housing Ratio payment.

Who it's for

• Single buyer in a high-tax state — A buyer earning $68,000 gross in a 2.1% property tax county plugs in the real tax rate and discovers their recommended price drops to $230,000 — well below what they expected — giving them a realistic filter for the search.
• Couple comparing two metro areas — Partners considering a move run the same income and down payment at two different tax rates and find the lower-tax market improves their recommended purchase price by $55,000 on identical income.
• Buyer deciding when to buy versus save more — A saver at $28,000 runs the calculator, sees their recommended price, then reruns it at $40,000 saved to see whether the extra 16 months of waiting meaningfully expands their range — and makes a decision based on data.
• Refinance candidate resetting expectations — A homeowner considering an upgrade after building equity reruns their affordability at the current rate environment to see how much their purchasing power has shifted before contacting a lender.

Key terms

28% housing ratio

The guideline that monthly housing costs (PITI) should not exceed 28% of gross monthly income. Used by lenders and financial planners as a benchmark for sustainable homeownership.

APR (Annual Percentage Rate)

The annual interest rate charged on the mortgage, used to calculate the monthly principal and interest payment. Different from the note rate when points or fees are rolled in.

Effective property tax rate

Annual property taxes as a percentage of the home's market value. Varies significantly by state and county — the single most important local variable to look up before running an affordability calculation.

Sources & further reading

• Mortgage Bankers Association — house affordability, rates & application trends — MBA's Weekly Applications Survey and Purchase Applications Payment Index quantify how 30-year fixed mortgage rates and median purchase loan amounts move the principal-and-interest portion of PITI that drives house affordability calculations.
• FHFA DataTools — House Price Index & conforming loan limits for affordability — FHFA publishes the House Price Index and annual conforming loan limit ($766,550 baseline for 2024, higher in high-cost counties) that cap conventional loan sizes used in any house affordability calculation.
• Urban Institute Housing Finance Policy Center — affordability & DTI research — Urban Institute's Housing Credit Availability Index and monthly Housing Finance at a Glance chartbook document how the 28% front-end and 43% back-end DTI thresholds used in house affordability calculators map to actual GSE and FHA underwriting outcomes.
• Harvard JCHS — State of the Nation's Housing affordability benchmarks — JCHS's annual State of the Nation's Housing report tracks cost-burdened households (housing costs over 30% of income) and median price-to-income ratios, the empirical benchmarks behind the 28% housing ratio used in house affordability calculations.
• Realtor.com Research — monthly housing affordability & list-price data — Realtor.com's monthly Housing Trends Report and Affordability Distribution Score publish national and metro median list prices plus the share of listings affordable at the local median income — the real-world inventory side of any house affordability calculation.