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Estimate the maximum home price you can afford based on income, debts, down payment, and loan terms.
28% Front-End Rule: Max Monthly Payment = (Annual Income / 12) x 28%
Available Payment = Max Monthly Payment - Monthly Debts
Max Loan = Available Payment x [(1+r)^n - 1] / [r(1+r)^n]
Max Home Price = Max Loan + Down Payment
The 28% front-end ratio guideline states that your total housing payment (principal, interest, taxes, insurance) should not exceed 28% of your gross monthly income.
The back-end ratio says total debt payments — including housing plus all other debts — should not exceed 36% of gross income. Many lenders now allow up to 43% or higher.
Include minimum monthly payments on all recurring obligations: car loans, student loans, credit card minimums, personal loans, and any other monthly debt payments.
A larger down payment reduces the loan amount, lowers monthly payments, and may eliminate private mortgage insurance (PMI), which is required when you put down less than 20%.
Beyond the mortgage, budget for property taxes, homeowners insurance, HOA fees (if applicable), maintenance (typically 1% of home value per year), and closing costs (2-5% of the purchase price).
No. This calculator estimates principal and interest only. Property taxes and homeowners insurance will increase your actual monthly housing cost.