Estimate the maximum home price you can afford using the standard 28/36 debt-to-income rule.
Most mortgage lenders use the "28/36 rule" as a quick affordability check: your housing costs (principal, interest, taxes and insurance) shouldn't exceed 28% of your gross monthly income, and your total debt payments (housing plus other loans) shouldn't exceed 36%.
Max Housing Payment = min(28% × Monthly Income, 36% × Monthly Income - Other Debts)
The calculator assumes roughly 75% of that payment goes to principal & interest and estimates your maximum loan using the standard amortizing-loan formula, then adds your down payment to get an estimated home price.
With a $90,000 annual income, $400 in other debts, a $30,000 down payment, a 6.5% rate and a 30-year term, this calculator estimates a maximum loan of about $249,000 and a maximum affordable home price of roughly $279,000, depending on your actual tax and insurance costs.
It typically applies a percentage of your gross income (like the 28/36 rule: housing costs under 28% of gross income) combined with your down payment, debts, and current interest rates to estimate a comfortable price range.
A guideline suggesting no more than 28% of gross monthly income go to housing costs, and no more than 36% to total debt payments including housing.
A thorough affordability estimate should include estimated property taxes, homeowners insurance, and possibly HOA fees, not just principal and interest.