How Much House Can I Afford?

The number, and the warning that goes with it

On a $90,000 household income, $900/month of other debt, a $40,000 deposit and a 6.5% rate, a lender is likely to approve about $268,000 — on a monthly housing budget of $1,800 including taxes and insurance.

Read that as a ceiling, not a target.

It's the most a lender will risk, calculated from its interests. Nobody in the transaction is asking whether you'll still be able to save, replace the car, or absorb a broken boiler in year one.

The 28/36 rule is a convention, not a law

• Front-end ratio: housing costs ≤ 28% of gross monthly income
• Back-end ratio: all debt payments ≤ 36% of gross

These are long-standing conventional underwriting guidelines, and they get varied from constantly. FHA lending commonly runs nearer 31/43, and plenty of conventional loans are written above a 43% back-end.

Both percentages are inputs in the calculator for exactly that reason. If a lender has quoted you different ones, use theirs.

Your debt is free until suddenly it isn't

This is the most useful thing on the page, and almost nobody explains it.

Only one of the two ratios binds at a time. Whichever limit is lower is the one actually constraining you.

On the defaults:

• Front-end limit: $2,100/mo
• Back-end limit after $900 of debts: $1,800/mo

The back-end is lower, so it's binding.

Now watch what happens as debt changes:

Other monthly debt	Max price	House lost
$0	$307,398	—
$900	$268,203	$39,195
$1,000	$255,138	$52,260

At $0 of debt the front-end ratio binds at $2,100, and the back-end limit is $2,700 — so the first $600/month of debt payments costs you absolutely nothing in borrowing power.

Past that, every extra dollar bites. Going from $900 to $1,000 of monthly debt — a hundred dollars — costs you exactly $13,065 of house.

There's a cliff, and people walk off it without noticing, because the first few debts genuinely were free.

Which means "pay off debt first" depends entirely on which ratio binds

If the back-end is your lower limit, clearing a small debt with a high monthly payment can buy you more house than months of extra saving. The tail end of a car loan is often exactly that shape — small balance, large payment.

If the front-end is your lower limit, clearing that same debt buys you nothing at all.

The calculator shows both limits side by side so you can see which one you're actually up against before deciding where to put your money.

Housing costs means PITI, not the mortgage

Principal, Interest, Taxes and Insurance — plus any HOA fee.

This trips people up when comparing against rent, because the mortgage quote they've been shown is usually just principal and interest. On the defaults, the split is:

• Principal + interest: $1,442.40
• Taxes + insurance: $357.60

That's 20% of the monthly cost sitting outside the mortgage — and it's the part that keeps rising after your rate is fixed.

A fixed-rate mortgage does not give you a fixed housing payment.

Why this needs algebra rather than division

Property tax and insurance scale with the house price. But the loan is the price minus your deposit. So the thing you're solving for appears on both sides.

Rearranged:

price = (payment − HOA + deposit × k) ÷ (k + (tax rate + insurance rate) ÷ 12)

where k is the monthly payment per dollar borrowed.

Calculators that skip this and just divide the payment by a payment factor overstate what you can afford, because they quietly leave the taxes out of the budget they're solving against.

A longer term buys less than it looks like

Stretching the term from 25 to 30 or 40 years lowers the monthly payment, which raises the price the ratios will allow. That's real, and it's the lever most people reach for last.

It's also the most expensive one. A longer term buys you a bigger house by paying interest for longer — the ratios don't care, but you should. Change the term in the calculator and watch the price move; then remember that the extra years are years of payments, not years of ownership you weren't going to have anyway.

What's deliberately missing

• PMI — you'll pay it on a deposit under 20%, and it comes out of the same monthly budget
• Closing costs — held back in addition to the deposit
• Maintenance — real, relentless, and not in any lender's calculation
• Credit score, employment history, reserves — the ratios are necessary conditions, not sufficient ones

So what should you actually spend?

Less than this. The calculator can't tell you how much less, because that's a question about your life rather than your income.

The useful exercise: take the monthly figure, subtract what you currently save each month and want to keep saving, and see whether the remainder still works.

If it doesn't, the number was never really available to you.