How lenders decide what you can afford
Mortgage lenders look at two debt-to-income (DTI) ratios:
The classic conservative rule is 28% / 36%. Conventional and FHA loans often allow more — around 31% / 43%, and higher with strong credit and savings. Your housing payment includes principal, interest, property tax, insurance and HOA dues.
The calculator takes the lower of the two limits, subtracts insurance and HOA, and solves for the home price whose mortgage payment plus property tax fits exactly.
Example
With a $100,000 income, $500 of monthly debts, $60,000 down and a 6.5% 30-year rate, the 28% limit allows a $2,333 housing payment — enough for a home of about $354,000 after property tax and insurance.
Qualifying vs. comfortable
The amount a lender approves isn’t necessarily what’s comfortable. Leave room for maintenance (often 1–2% of the home’s value a year), retirement saving and an emergency fund. Many buyers aim below their maximum.
Related Homeownership & Underwriting Tools
Determining your conservative purchase ceiling protects against becoming house-poor. Model exact monthly PITI payments with our Mortgage Calculator, calculate upfront equity requirements using the Down Payment Calculator, compare real estate equity building to renting via the Rent vs Buy Calculator, and lower your debt-to-income (DTI) ratio with our Debt Payoff Calculator.
Frequently asked questions
How much house can I afford on $100,000 a year?
Roughly $300,000–$450,000 depending on your debts, down payment, interest rate and local property taxes. Enter your own numbers above for a personal estimate.
Does a bigger down payment let me afford more?
Yes. Every extra dollar down adds a dollar to the price you can afford without raising your payment, and reaching 20% removes PMI.
How do interest rates affect affordability?
Higher rates mean more of each payment goes to interest. A one-point rise in rates typically cuts buying power by around 10%.