House Affordability Calculator

The 28/36 rule is the underwriting baseline lenders have used for decades on conventional mortgages. The 28% front-end cap limits your full PITI housing payment (principal, interest, property taxes, homeowners insurance, plus PMI and HOA if applicable) to 28% of gross monthly income. The 36% back-end cap limits all monthly debts combined (housing plus car loans, student loans, credit card minimums, alimony) to 36% of gross. Both caps apply simultaneously, and whichever is tighter sets your real ceiling. On a $90,000 gross income the front-end cap is $2,100 per month and the back-end cap leaves $2,700 for housing if you have no other debts. This calculator picks the more restrictive of the two automatically.

FHA loans use 31% front-end and 43% back-end ratios, which is meaningfully more permissive than conventional 28/36. The extra headroom can add tens of thousands to your max home price, and FHA only requires 3.5% down with a 580+ credit score. The trade-off is mortgage insurance: an upfront premium of 1.75% of the loan amount (financed into the balance) plus an annual MIP of about 0.55% that, on most loans originated after 2013, does not auto-cancel the way conventional PMI does once you hit 80% LTV. You usually have to refinance into a conventional loan to drop FHA MIP.

PMI (private mortgage insurance) is required on conventional loans any time your down payment is below 20% (loan-to-value above 80%). It protects the lender, not you, against default. PMI typically runs 0.3% to 1.5% of the loan amount per year depending on credit score and LTV. This calculator uses 0.5% as a working mid-range assumption. On a $300,000 loan that adds roughly $125 per month. The good news is that conventional PMI auto-cancels by law (Homeowners Protection Act of 1998) when scheduled LTV reaches 78%, and you can request manual cancellation at 80% based on a current appraisal.

Because lenders do, and because they are part of the real monthly bill. The full carrying cost of a home is PITI (Principal + Interest + Taxes + Insurance) plus any HOA dues and PMI. On a typical $400,000 home, principal and interest might be $2,400 per month while property tax, homeowners insurance, and PMI push the actual escrow payment to $3,000 or more. If a calculator only models P&I, it overstates what you can afford by 20% to 30%, which is exactly how people end up house-poor. Lenders qualify you against the full PITI number, and so does this calculator.

Property tax is one of the biggest swing factors in housing cost because it scales directly with the home price and applies every year forever. The US average is about 1.1% of home value annually, but the range is enormous. New Jersey averages 2.5%, Illinois about 2.3%, Texas about 1.7%, and New Hampshire about 2.1%. At the low end, Hawaii sits at roughly 0.3%, Alabama 0.4%, and Colorado 0.5%. On a $500,000 home the difference between NJ at 2.5% and HI at 0.3% is $11,000 per year, or about $920 per month, which is bigger than most mortgage rate changes. Set the property tax field to your county's actual rate rather than the national default for a realistic affordability number.