Income to Mortgage Calculator
Calculate how much house you can afford based on your income.
Uses the 28/36 rule to estimate your maximum mortgage and home price.
How Much House You Can Afford
The 28/36 rule is the standard guideline lenders use:
- 28% rule: Your monthly housing costs should not exceed 28% of gross monthly income
- 36% rule: Your total debt payments should not exceed 36% of gross monthly income
Max Housing Payment = (Annual Income / 12) × 0.28
Max Total Debt = (Annual Income / 12) × 0.36
Max Mortgage Payment = Min(Max Housing, Max Total Debt - Existing Debts)
Then the maximum loan amount is calculated by reversing the amortization formula:
Max Loan = Payment × [(1+r)^n - 1] / [r × (1+r)^n]
Max Home Price = Max Loan / (1 - Down Payment%)
Example: $80,000 annual income, 20% down, 6.5% rate, 30-year term, $400/mo existing debts:
- Max housing payment = $1,867/month
- Max total debt allowed = $2,400/month
- Adjusted for existing debts = $2,000/month
- Max home price = approximately $316,000
Tips:
- Just because you qualify for a certain amount does not mean you should borrow that much
- Leave room in your budget for maintenance, insurance, and unexpected costs
- Lower debt-to-income ratios give you more borrowing power