"How much house can I afford?" is one of the most-searched money questions, and most answers online are vague rules of thumb. There's actually a specific, widely-used formula behind it.
28/36 rule calculator, what the two numbers mean
Mortgage underwriters commonly apply two limits: your housing payment shouldn't exceed 28% of gross monthly income (the front-end ratio), and your total debt payments — housing plus car loans, credit cards, student loans — shouldn't exceed 36% (the back-end ratio). Whichever limit is stricter for your situation sets your real budget.
How much house can I afford, worked as a real example
Take a $100,000 gross annual income with $500 in other monthly debts, a $40,000 down payment, a 6.5% rate, and a 30-year term. The 28% rule caps housing at $2,333/month; the 36% rule (after subtracting the $500 debt) allows $2,500 — so the 28% rule is the binding limit. Solving for the home price that fits that exact monthly budget, including property tax and insurance, lands at $340,064.
Home affordability by income, why tax and insurance can't be an afterthought
A calculator that only looks at the loan payment will overstate what you can afford, because property tax and insurance eat into the same monthly budget. This tool solves for home price with tax and insurance already built into the budget constraint — not added on top of a number that's already at your limit.
