Monster Home Affordability Calculator
Enter your income, debts, down payment and rate — we'll apply the classic 28/36 rule to find the maximum home price you can comfortably afford.
| Max monthly housing payment | $0 |
| Limiting rule | — |
| Loan amount | $0 |
| Down payment | $0 |
How it works
The 28/36 rule caps your housing payment (principal, interest, tax, insurance) at 28% of gross monthly income, and at 36% of income minus existing debts. The lower of the two wins. That payment is converted to a max loan via the present-value annuity formula, then your down payment is added for the max price.
Formula & worked example
Formula: The 28/36 rule: housing payment (principal, interest, tax, insurance) capped at 28% of gross monthly income, and at 36% of income minus existing monthly debts. The lower cap wins and is converted to a maximum loan.
Worked example: On $90,000/year ($7,500/month): the 28% cap allows $2,100/month; the 36% cap minus $400 of debts allows $2,300 — so $2,100 is the maximum housing payment.
When to use this
- You are about to house-hunt and want a price ceiling from your own numbers before an agent or lender sets one for you.
- You are deciding between paying off a car loan and saving longer, and want to see what the debt is costing you in house price.
- A rate move has changed what the same income buys and you need the new ceiling, not last spring's.
- Two incomes will be combined on the application and you want the joint figure with both sets of debts counted.
How to use it, step by step
- Enter gross annual income — combined, if you will apply together.
- Enter total monthly debts: car payments, student loans, card minimums and any other loan payment on your credit report.
- Enter the down payment you have saved, separate from your emergency reserve.
- Set the interest rate and term from a current quote.
- Enter yearly property tax and insurance for the area you are buying in — this line shrinks the loan more than most buyers expect.
- Read the maximum price, and note which of the two rules set it; that is the lever to work on.
What the inputs mean
| Input | What it is | Typical values |
|---|---|---|
| Gross annual income | Pre-tax income the lender counts | Salary plus reliable bonus or second income |
| Monthly debts | Minimum payments on existing loans and cards | Auto, student, personal loans, card minimums |
| Down payment | Cash available for the purchase itself | Keep closing costs and reserves separate |
| Interest rate and term | Terms of the loan you would take | 30 years is the default comparison |
| Tax and insurance per year | Annual property tax plus homeowners insurance | Varies hugely by state — check the target area |
Another worked example
On $120,000 a year — $10,000 a month — with $650 of monthly debts, an $80,000 down payment, a 6% rate over 30 years and $7,200 a year of tax and insurance: the 28% housing rule caps the total housing payment at $2,800 a month, while the 36% total-debt rule allows $2,950 after debts, so the 28% rule is the one that limits. After $600 a month for tax and insurance, the remaining $2,200 a month supports a loan of $366,942, giving a maximum home price of $446,942.
Frequently asked questions
What is the 28/36 rule?
A long-standing lender guideline: no more than 28% of gross income on housing, and no more than 36% on all debt including housing. Some loan programs allow higher ratios.
Do debts really lower how much house I can afford?
Yes — the 36% cap counts every monthly debt payment, so $500/month in car and student loans can cut your max price by tens of thousands.
Does a bigger down payment help?
It raises your max price dollar-for-dollar and can eliminate PMI at 20% down, which further improves affordability.
Why are tax and insurance subtracted before the loan size is worked out?
Because the 28% and 36% caps apply to the whole housing payment — principal, interest, tax and insurance together — not just the mortgage. In a high-tax area that can consume several hundred dollars of the monthly cap, leaving noticeably less for the loan itself. Two buyers with identical incomes can afford very different prices purely because one is shopping where property tax runs high.
Why is this based on gross income when my budget runs on take-home pay?
Because lender debt-to-income ratios are defined on gross income, and this tool mirrors the test a lender will run. It answers 'what will a lender count me able to afford', not 'what payment will feel comfortable'. Run your own second check on take-home pay before treating the maximum as a target — the comfortable figure is usually below the lendable one.
Which debts belong in the monthly debts field?
Payments a lender can see: auto loans, student loans, personal loans, and the minimum payments on credit cards, plus things like child support where they apply. Rent, utilities, groceries and subscriptions do not count toward the lender ratios, however real they feel in your budget — which is another reason the lendable maximum and the comfortable maximum are two different numbers.
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