Learn the simple math lenders use to determine your buying power — and how to calculate what's comfortable for your actual budget, not just what you can qualify for.
Most mortgage lenders follow the 28/36 rule — it's the industry standard for determining how much you can borrow.
Your total monthly housing costs should not exceed 28% of your gross monthly income.
What's included:
Your total monthly debts — including housing — should not exceed 36% of your gross monthly income.
What's included (in addition to housing):
Note: FHA loans may allow up to 43-50% back-end DTI with compensating factors. VA loans can be even more flexible. These are guidelines, not absolute limits.
These are estimates based on the 28/36 rule with current rates and average assumptions.
| Annual Income | Monthly Income | Max Monthly Pmt (28%) | Est. Home Price Range |
|---|---|---|---|
| $50,000 | $4,167 | $1,167 | $140K - $170K |
| $75,000 | $6,250 | $1,750 | $220K - $270K |
| $100,000 | $8,333 | $2,333 | $300K - $370K |
| $125,000 | $10,417 | $2,917 | $380K - $470K |
| $150,000 | $12,500 | $3,500 | $460K - $560K |
| $200,000 | $16,667 | $4,667 | $620K - $760K |
Estimates assume 5% down payment, current average rates, and standard property tax/insurance assumptions. Your actual buying power depends on credit score, DTI, down payment, and loan program.
Use our calculator to see your actual affordability based on your unique financial situation, then get pre-approved when you're ready.
Your max purchase price isn't just about income. These factors all play a role.
Higher scores unlock better rates, which increases your buying power. A 100-point jump could add $30K+ to your price range.
More down means smaller loan and possibly no PMI. 20% down eliminates PMI on conventional loans entirely.
A 1% rate change can shift your buying power by tens of thousands. Rates directly affect your monthly payment.
Existing debt shrinks your buying power. Paying down a $400/mo car loan could add $50K to your home budget.
FHA, VA, conventional — each has different DTI limits, down payment requirements, and insurance costs that affect affordability.
Property taxes and insurance vary by state and county. These ongoing costs directly impact what you can afford monthly.
Continue learning with these helpful mortgage education guides.
Learn how much you really need and where to find down payment assistance.
Learn moreUnderstand credit scores and debt-to-income ratios for mortgage approval.
Learn moreKnow what closing costs to expect and how they affect your total cash needed.
Learn moreCompare the true cost of renting versus buying to see which makes more financial sense.
Learn moreLearn how rates work, what affects them, and how to get the best rate possible.
Learn moreGet pre-approved to know your real buying power before you start shopping.
Learn moreNo credit impact to check · Takes about 10 minutes