Home Affordability Calculator

Only once it's high enough to matter. This calculator takes the SMALLER of two limits: 28% of gross monthly income for housing alone, or 36% of gross monthly income minus your existing debts for everything combined. Those two limits produce the same housing budget exactly when Monthly Debt Payments equals about 8% of gross monthly income (0.36 - 0.28 = 0.08) -- below that debt level, the 28% housing-only limit is what actually binds and additional debt payments change nothing, while above it, every extra dollar of debt reduces your allowed monthly housing PAYMENT dollar for dollar -- which in turn reduces the maximum home price that payment can support, though not dollar for dollar, since price and payment are related through amortization, not a 1:1 ratio.

Yes -- a longer Loan Term spreads the same loan amount's principal and interest across more payments, lowering the monthly principal & interest payment for any given loan size. Since this calculator solves for the home price whose total monthly payment fits your fixed housing budget, a lower per-dollar monthly cost from a longer term lets that same budget support a larger loan, and therefore a higher maximum home price.

A higher Interest Rate raises the principal & interest payment required to service any given loan amount, so more of your fixed monthly housing budget goes toward interest rather than borrowing power. Since the calculator searches for the home price that keeps total monthly payment within budget, a higher rate means a smaller loan (and home price) fits within that same fixed monthly ceiling.

36% is a conservative, traditional guideline, not a universal hard limit -- this calculator uses it because it produces a cautious, buffer-including estimate. Many actual mortgage programs (particularly FHA and some conventional loans with strong compensating factors like excellent credit or large cash reserves) approve borrowers at DTI ratios noticeably above 36%, sometimes into the 43-50% range, so real lenders may qualify you for more than this estimate shows.