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For educational purposes only — not financial advice. Learn about our editorial process

C.02 · Housing

What house can you actually afford?

Lenders will often approve you for as much as 43% of your pre-tax income going to debt. A comfortable budget usually sits well below that. We show all three — cautious, typical, stretched — so you can see where the math gets uncomfortable.

Debt-to-income limits
28/36 · 30/43 · 35/50
Housing share / total-debt share of pre-tax income
Inputs
Annual income (before taxes)
$85,000
Monthly debt paymentsCars, student loans, credit cards
$400
Down payment (% of home price)
20.00%
Interest rate
6.53%
Most home you could buy · moderate budget
$418,939
The two numbers are caps on the share of your pre-tax (gross) monthly income that can go to (1) your housing payment and (2) all your debts combined. Lower = safer.
Estimated monthly payment (loan principal & interest only): $2,125
This does not include property tax, home insurance, or PMI, which raise your real monthly cost.
What you still owe, year by year
Based on a 30-year loan at the moderate budget's top price
$0$166K$331KYear 0Year 15Year 30
Year-by-year breakdown

How your payments add up · Typical budget

How this loan gets paid down over 30 years. Each year, part of your payment chips away at the loan (principal) and part is interest — this shows the split. Pick a different budget above to see how the numbers change.

Year
Principal
Interest
Balance
Progress
1
$3,725
$21,775
$331,426
1%
2
$3,975
$21,525
$327,451
2%
3
$4,243
$21,257
$323,208
4%
4
$4,528
$20,972
$318,680
5%
5
$4,833
$20,667
$313,846
6%
6
$5,158
$20,342
$308,688
8%
7
$5,506
$19,994
$303,182
10%
8
$5,876
$19,624
$297,306
11%
9
$6,271
$19,229
$291,035
13%
10
$6,693
$18,807
$284,342
15%
11
$7,144
$18,356
$277,198
17%
12
$7,624
$17,876
$269,573
20%
13
$8,138
$17,362
$261,436
22%
14
$8,685
$16,815
$252,751
25%
15
$9,270
$16,230
$243,481
27%
16
$9,893
$15,607
$233,588
30%
17
$10,559
$14,941
$223,029
33%
18
$11,270
$14,230
$211,759
37%
19
$12,028
$13,472
$199,731
40%
20
$12,837
$12,663
$186,894
44%
Tipping point
21
$13,701
$11,799
$173,193
48%
22
$14,623
$10,877
$158,570
53%
23
$15,607
$9,893
$142,963
57%
24
$16,657
$8,843
$126,306
62%
25
$17,778
$7,722
$108,528
68%
26
$18,974
$6,526
$89,554
73%
27
$20,251
$5,249
$69,303
79%
28
$21,614
$3,886
$47,689
86%
29
$23,068
$2,432
$24,620
93%
30
$24,620
$880
$0
100%
How we compute this

Why three numbers, not one.

It comes down to two ratios: your housing cost divided by your pre-tax income (the 'housing ratio'), and all your debt divided by your pre-tax income (the 'total-debt ratio'). Different lenders and risk tolerances use different caps.

max monthly housing payment = the smaller of: (monthly pre-tax income × housing-ratio) or (monthly pre-tax income × total-debt-ratio − your current monthly debt payments)

Cautious uses 28/36 (the classic rule). Typical uses 30/43 (most conventional lenders). Stretched uses 35/50 — the limits some government-backed (FHA) loans and certain banks will allow. We find the biggest loan that fits each monthly limit at your rate, then work out the home price that down payment supports.

Next up

Continue the decision

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Frequently Asked Questions

The 28/36 rule says your monthly housing costs should not exceed 28% of your gross (pre-tax) income -- your housing share, a.k.a. the front-end ratio -- and total debt should not exceed 36% -- your total-debt share, or back-end ratio. This is the cautious standard most financial advisors recommend.