How Much House Can I Afford?
Lenders apply two ratios and take the lower. This does the same, then works backwards to a price — accounting for the fact that property tax rises with the price, which most affordability calculators quietly ignore.
Your inputs
Your result
Formula
The two ratios lenders use
The front-end ratio caps housing costs as a share of gross income, traditionally at 28 percent. The back-end ratio caps all debt payments together, traditionally at 36 percent, though many programmes stretch further. Whichever bites first is your real ceiling, and the calculator tells you which one it was.
If your existing debts are the constraint, paying down a car loan can raise your housing budget by considerably more than the payment you removed.
Why property tax makes this circular
Property tax is charged as a percentage of the home's value, so a more expensive house has a higher tax bill, which leaves less room for principal and interest, which lowers the price you can afford. The price depends on the tax and the tax depends on the price. This calculator resolves that by iterating until the figure settles, rather than guessing a flat tax amount.
Approved is not the same as affordable
These ratios describe what a lender will accept, not what leaves you comfortable. They take no account of childcare, commuting, retirement saving, or how secure your income is. Many people are approved for substantially more than they should borrow, and the gap is where housing stress lives.
What is missing from the ceiling
Maintenance is not in any lender ratio, and it is real — roughly one percent of value a year on average. Nor are utilities, which are usually higher in a house than in an apartment. Budget for both on top of the payment shown here.
Frequently asked questions
What is the 28/36 rule?
Keep housing costs under 28 percent of gross income and all debt payments under 36 percent. It is a lending convention and a reasonable personal guideline, though many lenders will approve higher.
How much house can I afford on $110,000?
With modest existing debts and a meaningful deposit, the 28/36 ratios typically support somewhere in the region of four to five times income at current rates — but rate, tax rate and existing debts move it a lot. The figure above uses your own numbers.
Does a bigger down payment let me buy more house?
Yes, in two ways: it reduces the loan needed for a given price, and above 20 percent it removes PMI, freeing more of the payment for principal and interest.
Should I borrow the maximum?
Usually not. The ratios ignore childcare, retirement saving, maintenance and job security. Buying below the ceiling is what leaves room for the unexpected.