Home Affordability Calculator
Real EstateCalculate how much house you can afford using the standard 28/36 rule or Dave Ramsey's stricter rule, with property tax, homeowners insurance, and HOA fees included.
Estimated Max Home Price
Estimated maximum home price under your selected affordability rule, including property tax, homeowners insurance, and HOA fees alongside your loan payment.
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Real Estate calculators
Most lenders size a mortgage using the 28/36 rule: your housing payment should not exceed 28% of your gross monthly income, and your total debt, housing included, should not exceed 36%. This calculator applies whichever limit is more restrictive, and unlike a bare principal-and-interest estimate, it factors in property tax, homeowners insurance, and HOA fees too, since those are real, unavoidable parts of a monthly housing payment that meaningfully change what you can actually afford.
Because a home's property tax bill depends on its own price, and price is exactly what this calculator is solving for, the math below solves that circular relationship directly rather than guessing and checking. Enter your income, existing debts, down payment, and loan terms, and adjust the tax rate, insurance, and HOA fields to match your real area and situation.
Use the Affordability Rule selector to switch between the standard 28/36 rule and Dave Ramsey's stricter alternative, which caps your payment at 25% of your take-home pay on a forced 15-year fixed loan rather than 28% of gross income on whatever term you choose. The two methods can produce meaningfully different numbers for the same household, which is normal, they are answering the same question with different levels of caution.
The 28/36 Rule Explained
The 28/36 rule is the standard affordability guideline used by most major lenders. The 28 caps your monthly housing payment, principal, interest, taxes, and insurance combined, at 28% of your gross monthly income. The 36 caps your total monthly debt, housing plus any car loans, student loans, or credit cards, at 36% of that same income. This calculator checks both limits and uses whichever one allows less, since a lender applies the same logic.
- 28% limit: gross monthly income x 0.28, for housing costs alone
- 36% limit: (gross monthly income x 0.36) minus your other monthly debt, for housing costs after debt
- Whichever number is smaller becomes your real monthly housing budget
Your interest rate has an outsized effect on the result: a lower rate means less of each monthly dollar goes to interest, so more of your fixed budget can go toward principal, which raises the loan (and home price) that budget supports. Even a single percentage point of difference can shift your real affordable price by tens of thousands of dollars, adjust the rate field to a current real quote rather than leaving the default in place.
Why Property Tax and Insurance Matter
A simplified affordability estimate based on principal and interest alone can meaningfully overstate what you can actually afford, since property tax, homeowners insurance, and any HOA dues come out of the same monthly housing budget the 28/36 rule caps. The default property tax rate here, 1.1% annually, and the default insurance figure, $1,500 a year, both approximate real national averages, adjust them to your actual area since property tax rates alone range from under 0.3% to over 2% depending on the state and county, check the Property Tax Calculator for a more specific local estimate.
Dave Ramsey's Rule: A Stricter Alternative
Dave Ramsey's own guidance sets a stricter bar than most lenders: a house is affordable when the payment is no more than 25% of your monthly take-home (after-tax) pay, on a 15-year fixed-rate loan specifically, not the 30-year term most affordability calculators, including the standard 28/36 rule above, assume by default. Selecting this rule above swaps in your take-home pay and forces the 15-year term automatically.
- Uses take-home pay, not gross income, a smaller number to begin with
- Applies a lower percentage, 25% instead of 28%
- Forces a 15-year term, which raises the monthly payment on any given loan amount compared to a 30-year term, further shrinking the affordable price
- The result is usually a meaningfully lower number than the standard 28/36 estimate for the same household
Enter your actual monthly take-home pay, not your gross income, in that field for an accurate Ramsey-rule number. Real 15-year mortgage rates typically run somewhat lower than 30-year rates, so check a real current 15-year rate rather than reusing the 30-year rate above if you want full precision.
What This Does Not Include
Closing costs, typically 2 to 5% of the purchase price, are not built into this estimate, since in practice many buyers cover them from savings separate from the down payment, negotiate seller credits, or roll a portion into the loan, practices that vary too much to model as one universal rule. Private mortgage insurance (PMI), usually required when your down payment is under 20% of the home price (check your own ratio), is also not modeled here, and would further lower your real affordable payment if it applies to you.
This estimate also does not reflect your actual mortgage approval: real lenders weigh your credit score, employment history, and cash reserves too, any of which can move the real number up or down from what a rule of thumb suggests. Treat this as a real planning starting point, then get pre-approved by an actual lender for a number you can rely on.
Ongoing ownership costs beyond the loan itself, maintenance and repairs, utilities, and general upkeep, are also outside this calculator's scope, since lenders do not include them in a debt-to-income calculation even though they are a real part of what owning a home actually costs each month. Budget for them separately, on top of whatever number this tool returns.
Frequently Asked Questions
What is the 28/36 rule?
The 28/36 rule is a common lender guideline: your housing costs should not exceed 28% of your gross monthly income, and your total debt payments, housing included, should not exceed 36%. This calculator uses whichever limit is more restrictive.
Does this include property tax and insurance?
Yes. Unlike a simplified principal-and-interest-only estimate, this calculator factors in your property tax rate, homeowners insurance, and any HOA fees, solving for the true maximum home price after those real monthly costs are covered alongside your loan payment.
Why does my down payment matter so much?
A larger down payment reduces how much you need to borrow, directly increasing the home price you can afford at the same monthly budget. It can also help you avoid private mortgage insurance (PMI), which most lenders require once your down payment falls below 20% of the home price.
What is Dave Ramsey's rule for buying a house?
Ramsey's rule caps your house payment at 25% of your monthly take-home (after-tax) pay, on a 15-year fixed-rate loan. It is stricter than the standard 28/36 rule on three fronts at once: a smaller income base, a lower percentage, and a shorter loan term that raises the monthly payment for any given loan amount.
Why is the Ramsey rule stricter than the 28/36 rule?
Because it stacks three conservative assumptions together instead of one: take-home pay is smaller than gross income, 25% is a lower ceiling than 28%, and a 15-year loan carries a higher monthly payment than a 30-year loan for the same amount borrowed. Each factor alone would lower the result some, together they usually lower it substantially.
Does a bigger down payment always help me avoid PMI?
Usually, yes, once your down payment reaches 20% of the home's price, most conventional lenders drop the PMI requirement entirely. Below that threshold, PMI is a real added monthly cost this calculator does not model, on top of the payment shown here.
What about closing costs?
Not included here. Closing costs typically run 2 to 5% of the purchase price and are commonly paid from savings separate from your down payment, though practices vary, some buyers roll them into the loan or negotiate seller credits. Budget for them separately from the numbers this calculator shows.
How much house can I afford making $100,000 a year?
It depends heavily on your other debts, down payment, interest rate, and local property tax and insurance costs, which is exactly why a single flat multiple of income is not a reliable answer. Enter $100,000 into the income field above along with your own real numbers for an estimate tailored to your actual situation rather than a generic rule of thumb.
Sources
- Monthly Payment Worksheet, Consumer Financial Protection Bureau (CFPB)
- Your Home Loan Toolkit, Consumer Financial Protection Bureau (CFPB)
- Buying a Home, U.S. Department of Housing and Urban Development (HUD)
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