Approved for is not the same as afford
Lenders routinely approve DTIs of 45% and above with strong credit and reserves. The 28/36 rule is the conservative version, and it is closer to what leaves room for retirement contributions, childcare, and a life. The gap between the two numbers is where house-poor households come from.
Paying off a car often beats saving more
A $500 car payment consumes $500 of your 36% allowance, which translates to roughly $75,000–$80,000 of purchase price at current rates. Saving an extra $10,000 for the down payment moves the price by about $10,000. If you can clear an instalment loan before applying, that is almost always the bigger lever.
What counts in the debt figure
Minimum credit card payments, car loans, student loans (the reported payment, or a percentage of balance if deferred), personal loans, child support and alimony. Not included: utilities, insurance, groceries, phone bills or anything not reported to credit bureaux.
Down payment size changes the answer twice
More cash down reduces the loan, which lowers the payment, and crossing 20% removes PMI entirely. Between 15% and 20% down there is often a step change in affordability that is larger than the cash difference alone — worth modelling both sides before committing.
FAQ
How much house can I afford on $110,000 a year?
Under the 28/36 rule, about $2,567/month for housing before other debts. With $650/month of other debt and $60,000 down at 6.75%, that supports roughly a $380,000–$400,000 home depending on local tax rates. Enter your figures above for the exact number.
What is the 28/36 rule?
Spend no more than 28% of gross monthly income on housing, and no more than 36% on housing plus all other debt payments. It is the traditional underwriting guideline and a reasonable conservative ceiling.
Does the calculator include property taxes and insurance?
Yes. The 28% cap covers the full payment: principal, interest, taxes, insurance, PMI where applicable, and HOA dues. Calculators that only test principal and interest overstate affordability significantly.
How much do I need for a down payment?
Conventional loans go as low as 3%, FHA 3.5%, and VA and USDA can be zero. Below 20% you pay PMI, which typically adds 0.5–1% of the loan per year until you reach 20% equity.
How this calculator is built
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Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
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See our editorial policy and disclaimer. Results are estimates, not advice.