House affordability calculator
The 28% rule says keep housing costs under 28% of gross income. On $100,000/year, that's $2,333/month for mortgage, tax, and insurance combined. But lenders will approve you for 43% debt-to-income — a number that maximizes their loan volume, not your financial health. What you're approved for and what you can comfortably afford are very different numbers.
Good to know
Pre-approval is not commitment. A lender pre-approving you for $500,000 means they'll lend you that much — not that you should borrow it. Pre-approval is based on debt-to-income ratios that max out what's technically possible, not what's financially comfortable. Treat pre-approval as an upper limit, then buy significantly below it.
Property tax varies more than you'd expect. New Jersey averages 2.2% of home value annually; Hawaii averages 0.3%. On a $400,000 home, that's $8,800/year vs. $1,200/year — $633/month difference in housing cost for identical homes. Check the actual tax bill for any property you're considering, not just the listed price.
Rent is a ceiling; a mortgage is a floor. When you rent, the monthly amount is the maximum you pay (excluding utilities). When you own, the mortgage is the minimum. Things break, taxes rise, and insurance increases. A $2,500/month rent is comparable to a $1,800/month mortgage plus costs, not a $2,500 mortgage.
Affordability vs approval
Lenders maximize loan volume within regulatory guardrails; you maximize sleep at night. Ratios like 28% front-end and 36% back-end exist because decades of defaults cluster above those bands—but they are still rules of thumb. Student loans, childcare, elder care, and commute costs do not always fit neatly in a form field.
Total cost of ownership includes maintenance distributions, HOA special assessments, and utilities you did not pay as a renter. If the mortgage calculator says one number and this tool adds taxes, insurance, PMI, and maintenance, believe the higher total when budgeting cash flow.
For transparency we expose methodology, assumptions, and engine version. When you share a scenario with a partner or advisor, paste the URL, list inputs, and cite the version so everyone debates the same math.
Trust & methodology: Editorially reviewed by the Howdeedo team. Content last reviewed March 2026. Calculation engine version 0.1.0. Open the section below for formula, assumptions, and sources.
Methodology & assumptions
Assumptions
- Mortgage P&I calculated using standard amortization formula
- Annual tax and insurance converted to monthly by dividing by 12
- PMI required when LTV > 80% for conventional loans (not for VA loans)
- PMI rates: Conventional 0.5-1% annually, FHA 0.85% annually
- Property tax estimated at 1.2% of home value annually if not provided
- Insurance estimated at 0.5% of home value annually if not provided
- Maintenance estimated at 1% of home value annually (rule of thumb)
- All amounts in current dollars
- 28% housing ratio commonly used for affordability
References
Methodology, disclaimers & sources
How it works
- Front-end ratio: Housing costs ÷ Gross monthly income (target ≤28%)
- Back-end ratio: All debt payments ÷ Gross monthly income (target ≤36%)
- Max loan = Payment affordable at current rate for given term
- Max home price = Max loan + Down payment
Details & assumptions
Uses 28/36 guidelines, current market rates, estimated taxes and insurance. Actual affordability depends on your specific situation, lender requirements, and comfort level.
Not financial or tax advice. This tool is for estimation and comparison only. Lending decisions, tax treatment, and affordability guidelines vary by lender and situation.