How much house can I afford?
It is the first question anyone asks and the last one most calculators answer. Working out a monthly payment is arithmetic; working out how much house can I afford means comparing that payment against what you actually earn.
That is what the affordability indicator in this calculator does. Enter your gross monthly income and any existing debt payments, and it grades the payment green, amber or red against the two limits lenders use. It is not a credit decision, but it is the same arithmetic a loan officer runs before they get to the paperwork.
The 28/36 rule: the mortgage rule of thumb lenders actually use
Ask three people how much home can you afford and you will get three answers. Ask a lender and you will get the 28 36 rule, which has been the standard mortgage rule of thumb for decades because it is simple enough to do in your head:
- 28% — the front-end ratio. Your monthly housing payment should stay under 28% of your gross monthly income.
- 36% — the back-end ratio. All your monthly debt payments together — housing plus car, credit cards and student loans — should stay under 36%.
Both are measured on gross income, before tax. Here is what it looks like on a $90,000 salary, which is $7,500 a month:
| Gross monthly income | $7,500 |
|---|---|
| 28% — maximum housing payment | $2,100 |
| 36% — maximum total debt payments | $2,700 |
| Existing car and student loan payments | −$800 |
| What is actually left for housing | $1,900 |
The 36% half is your debt-to-income ratio
That second number has a name lenders use constantly: your debt to income ratio, almost always shortened to DTI. It is just your total monthly debt payments divided by your gross monthly income, expressed as a percentage — and the 36% in the rule is simply a DTI ceiling.
In the example above: ($1,900 housing + $800 other debt) ÷ $7,500 = 36%. That is the number an underwriter looks at first. The affordability indicator in this calculator works as a dti calculator and a debt to income calculator at the same time as a payment calculator — enter your income and existing debts and it shows both ratios against their limits, so you can see which one is actually constraining you.
Worth knowing: 36% is the conservative benchmark, not a hard legal wall. Many loan programmes approve higher DTIs — often into the low 40s, sometimes beyond with strong credit or reserves. A higher DTI means the loan is possible, not that it is comfortable.
Notice which limit bound. The 28% rule allowed $2,100, but the 36% rule pulled it down to $1,900, because existing debt comes out of the housing budget dollar for dollar. That is the part people miss, and it is why paying off a car loan can raise your buying power more than saving another few thousand for the down payment.
At 6.5% over 30 years, $1,900 a month finances about $300,600. With 20% down that is roughly a $375,000 home. Below is the same calculation across a range of salaries, assuming no other debts — a rough guide to how much house can I afford based on salary:
| Gross salary | 28% housing budget | Loan | Home price |
|---|---|---|---|
| $50,000 | $1,170 | $185,000 | $231,000 |
| $75,000 | $1,750 | $277,000 | $346,000 |
| $100,000 | $2,330 | $369,000 | $461,000 |
| $150,000 | $3,500 | $554,000 | $692,000 |
| $200,000 | $4,670 | $738,000 | $923,000 |
Treat these as ceilings, not targets. The 28/36 rule ignores property tax, insurance, maintenance and how much you want left over for everything that is not your house.
Understanding your amortization schedule
Amortization is the schedule that turns one fixed payment into a shrinking debt. Every month, interest is charged on what you still owe — balance × (annual rate ÷ 12) — and whatever is left of your payment goes to principal.
Because the balance falls a little each month, next month's interest is a little smaller and a little more of the same payment reaches the principal. The payment never changes. The split inside it does, and it changes far more slowly than most people imagine.
The animated chart above shows exactly this. Orange is interest, dark is principal. On a $320,000 loan at 6.5% over 30 years, the two do not cross until month 233 — 19 years and 5 months in. For nearly two thirds of the loan, most of what you pay each month is rent on the money rather than ownership of the house.
The table behind that chart is your amortization schedule — the month-by-month list of what each payment does to the balance. One related term you may run into: a mortgage recast, where you pay a lump sum against the principal and the lender recalculates the payment down over the original term. It is the mirror image of paying extra: a recast lowers the payment and keeps the end date, while extra payments keep the payment and pull the end date forward.
The totals are worth sitting with too: that loan costs $408,142 in interest on top of the $320,000 borrowed. You repay $728,142 for a $320,000 debt — the interest alone is 128% of what you borrowed. Shortening the term or paying extra attacks exactly that number.
How extra payments can save you thousands
Add anything to the slider above and this becomes an extra mortgage payment calculator: a mortgage payment calculator with extra payments folded into the same amortization schedule, so you can use it as a mortgage payoff calculator without re-entering anything.
Here is the one lever that reliably beats everything else. Every extra dollar you send goes entirely to principal — none of it to interest — so it removes that dollar from the balance for the whole remaining life of the loan, along with all the interest it would have generated. Drag the extra payment slider above and watch the effect compound.
Same $320,000 loan at 6.5% over 30 years, where the payment is $2,022 a month:
| Extra per month | Paid off in | Total interest | Interest saved |
|---|---|---|---|
| Nothing | 30 yrs | $408,142 | — |
| $100 | 26 yrs 2 mo | $346,444 | $61,698 |
| $200 | 23 yrs 5 mo | $302,714 | $105,429 |
| $300 | 21 yrs 2 mo | $269,696 | $138,446 |
| $500 | 18 yrs | $222,590 | $185,552 |
Read the $200 row again. An extra $200 a month — $2,400 a year — pays the loan off 6 years and 7 months early and saves $105,429. Over the 23 years you would actually be paying, that is about $56,000 of extra payments buying $105,000 of savings.
Notice too that the returns taper. The first $100 saves $61,698; the fourth $100 adds only about $47,000 more. Early extra payments are worth more than late ones, because they remove principal that would otherwise accrue interest for decades.
One caveat worth stating plainly: no paying off home loan early calculator can tell you whether you should. It only tells you what it costs and what it saves. Whether that beats keeping the cash liquid, clearing higher-rate debt first or investing it is a judgement call about your own situation.
Before committing, check that your lender applies extra payments to principal rather than prepaying the next installment, and that there is no prepayment penalty. Both are worth a phone call.
Frequently asked questions
How much house can I afford based on my income?
The usual starting point is the 28/36 rule: no more than 28% of your gross monthly income on the housing payment, and no more than 36% on all debt payments combined. On a $90,000 salary — $7,500 a month before tax — that is $2,100 for housing and $2,700 for total debt. If you already pay $800 a month on a car and student loans, the second limit binds and your housing budget drops to $1,900, which at 6.5% over 30 years finances about $300,600 — roughly a $375,000 home with 20% down.
What is the 28/36 rule?
It is the mortgage rule of thumb most lenders start from. The first number is the front-end ratio: your total monthly housing payment should stay under 28% of gross monthly income. The second is the back-end ratio: every monthly debt payment added together — housing plus car, cards and student loans — should stay under 36%. The back-end limit is the one that usually bites, because existing debt eats into the housing budget dollar for dollar.
What is a debt-to-income ratio and what DTI do I need?
Your debt to income ratio is every monthly debt payment added together — the mortgage plus car loans, credit card minimums and student loans — divided by your gross monthly income. It is the 36% half of the 28/36 rule. On $7,500 a month, $2,700 of total debt payments is a 36% DTI. Many lenders will go higher than 36%, often into the low 40s, but the lower it is the more room you have when something unexpected happens. Enter your income and debts above to use the affordability indicator as a debt to income calculator.
How is mortgage amortization calculated?
Each month, interest is charged on the balance you still owe: balance × (annual rate ÷ 12). Whatever is left of your fixed payment goes to principal, which lowers the balance, so next month's interest is slightly smaller and slightly more goes to principal. The payment never changes; the split inside it does. That is why the early years feel like they barely move the balance.
How much extra payment will pay off my mortgage faster?
Far less than most people expect, because every extra dollar goes straight to principal. On a $320,000 loan at 6.5% over 30 years the payment is $2,022 and the interest bill is $408,142. Use the slider as an extra mortgage payment calculator to try your own figure. Adding $200 a month clears the loan in 23 years 5 months — 6 years 7 months early — and cuts the interest to $302,714, a saving of $105,429. Adding $500 finishes it in 18 years flat.
Does this include property tax, insurance and PMI?
No. It calculates principal and interest only. Property tax, homeowner's insurance and private mortgage insurance vary far too much by state, county and lender to fold into a generic formula. Your real monthly housing cost will be higher, often by several hundred dollars — which is worth remembering when you check the figure against the 28% limit.
Is it better to pay extra on the mortgage or invest the money?
Paying extra earns you a guaranteed, tax-free return equal to your mortgage rate. Investing might beat that over the long run, but it might not, and it is not guaranteed. The honest answer is that it depends on your rate, your tax situation and how much certainty is worth to you. This is a personal financial decision rather than a maths problem, and a qualified adviser can weigh your specific circumstances — the calculator only shows you what the mortgage side is worth.