How the calculation works
Lenders usually look at two ratios. The front-end ratio limits your housing payment to about 28% of your gross monthly income. The back-end ratio limits all your debts together — housing plus car, student loans and cards — to about 36%. The calculator uses whichever limit is lower, turns that payment into a maximum loan at your rate and term, and adds your down payment.
Example
With a gross income of $8,000 a month and $500 in other debts, the 28% rule allows a payment of $2,240. At 6.5% for 30 years that supports a loan of about $354,000. With $60,000 down, you could look at homes around $414,000.
Keep in mind
- The payment here is principal and interest. Property tax, insurance and HOA dues also come out of the same budget, so leave room for them.
- Being approved for an amount does not mean you should borrow all of it. Keep an emergency fund.
- Use the mortgage calculator to see the exact payment for a specific home.
Frequently asked questions
What is the 28/36 rule?
A common guideline: spend no more than 28% of gross monthly income on housing and no more than 36% on all debts combined.
Does my credit score matter?
Yes. A higher score usually gets a lower rate, and a lower rate raises the loan you can afford with the same payment.
See also
Results are estimates for information only and are not financial, legal or medical advice. Rates, taxes and fees vary — confirm with a professional or your lender.