Explain it like I’m 5
Buying a home usually means borrowing most of the money. Each month you pay some back, plus a fee for borrowing (interest), plus the town’s property tax and insurance in case something breaks or burns.
A simple safety rule says: of every $100 you earn before tax, spend no more than $28 on your home, and no more than $36 on your home plus all your other loans together. That leaves enough for food, fun and saving.
This calculator works backwards from that rule: it finds the biggest monthly payment that fits, then figures out how big a home price that payment can buy.
Words you’ll see, in plain English
- Mortgage
- A loan to buy a home. You pay it back a little every month for many years, and the home is the bank’s guarantee that you will.
- Down payment
- The cash you pay up front when you buy a home. The bank lends you the rest. Put $60,000 down on a $300,000 home and you borrow $240,000.
- Debt-to-income ratio (DTI)
- How much of your monthly income (before tax) goes to debt payments. Earn $6,000 a month and pay $2,100 toward your mortgage and loans, and your DTI is 35%. Lenders use it to decide how much you can borrow.
- PMI (private mortgage insurance)
- An extra monthly charge on many home loans when you put down less than 20%. It protects the lender, not you, and usually goes away once you own 20% of the home.
- Property tax
- A yearly tax your town or county charges on the value of your home. It’s often around 1% of the value, but varies a lot by place, and many lenders collect it with your mortgage payment.
- Principal
- The money you put in at the start, before any interest is added.
- Interest
- Money someone pays you for letting them use your money — or money you pay to borrow someone else’s.
More money words explained simply in our glossary.
How to use the affordability calculator
- Enter your household income before tax, and the monthly payments on any other debts.
- Enter your down payment — the cash you’ll put toward the price.
- Enter the rate and local costs. Property tax and insurance vary a lot by area; check a listing near you.
- Pick how careful you want to be. 28/36 is the classic rule; “stretch” is closer to what some lenders will approve.
How it works: the 28/36 rule
Housing budget = the smaller of (28% × monthly income) and (36% × monthly income − other debts)
Housing payment = principal & interest + property tax + insurance + PMI + HOA
The calculator finds the home price whose full housing payment equals that budget.
Example: $100,000 income, $500 of other debts, $60,000 down, 6.5% for 30 years.
- Monthly income: $100,000 ÷ 12 = $8,333.
- 28% rule: $2,333. 36% rule: $3,000 − $500 = $2,500. The smaller, $2,333, is the budget.
- That budget covers a home of about $338,068: $1,758 principal and interest, $310 property tax, $150 insurance and $116 PMI.
How much house you can afford by income
28/36 rule, no other debts, $50,000 down, 30-year loan, 1.1% property tax, $1,800/yr insurance, 0.5% PMI under 20% down.
| Income | At 5.5% | At 6.5% | At 7.5% |
|---|---|---|---|
| $50,000 | $197,000 | $184,000 | $173,000 |
| $75,000 | $272,000 | $253,000 | $247,000 |
| $100,000 | $355,000 | $329,000 | $307,000 |
| $125,000 | $438,000 | $405,000 | $377,000 |
| $150,000 | $521,000 | $482,000 | $447,000 |
| $200,000 | $688,000 | $634,000 | $587,000 |
Ways to afford more house
- Pay down other debts — when debts are what limits you, every $100 a month you remove adds to your housing budget.
- Save a bigger down payment, ideally 20% to avoid PMI.
- Improve your credit score for a lower rate.
- Look in areas with lower property tax or without HOA fees.
Common mistakes
- Budgeting for principal and interest only. Tax, insurance and PMI can add hundreds a month.
- Using the lender’s maximum. Approval isn’t the same as comfortable.
- Emptying your savings for the down payment, leaving nothing for closing costs, repairs or emergencies.
- Forgetting maintenance — plan on 1% to 2% of the home’s value each year.
Learn more
- What Is PMI (Private Mortgage Insurance)? — PMI is an extra monthly charge on most conventional home loans when you put down less than 20%. It protects the lender, not you — but it can be removed once you own enough of your home. Here’s how it works and how to get rid of it.
Frequently asked questions
How much house can I afford on my salary?
A common rule is that your total housing payment — mortgage, property tax, insurance and any PMI or HOA — should be no more than 28% of your gross monthly income, and all your debts together no more than 36%. On a $100,000 income with $500 of other debts and $60,000 down at 6.5%, that works out to a home of about $338,000.
What is the 28/36 rule?
A guideline lenders and planners use: spend no more than 28% of your before-tax monthly income on housing costs, and no more than 36% on housing plus all other debt payments like car and student loans. It keeps enough money left over for taxes, saving and everyday life.
How much house can I afford with a $100,000 salary?
With no other debts, $50,000 down and a 6.5% rate, roughly $329,000 using the 28/36 rule. The answer changes a lot with your debts, down payment, property tax and interest rate — each 1 percentage point higher rate lowers the price by roughly 7%.
Should I use the 28/36 rule or what the lender approves?
Lenders often approve more than is comfortable — some allow total debts up to 43% or higher. The approval only shows what the bank will lend, not what fits your life. Many people aim at or below 28/36 so they can still save, handle repairs and absorb surprises.
Do I need 20% down to buy a house?
No. Many conventional loans allow 3% to 5% down, and FHA loans 3.5%. But with less than 20% down you usually pay PMI, which raises your monthly cost, and you start with less equity in the home.
What costs are not included in the monthly payment?
Closing costs (often 2% to 5% of the price, paid once), moving costs, utilities, maintenance and repairs (a common rule is 1% to 2% of the home’s value per year), and furniture. Budget for these separately.
These results are estimates for education only, based on the assumptions you enter. They are not financial, investment or tax advice. Real returns, rates and taxes vary. See our methodology anddisclaimer.