Mortgage Affordability Calculator

The 28/36 Rule Lenders Actually Use

"How much house can I afford" has two answers: the one a lender will approve, and the one you can live with. This calculator starts with the first, because it is a hard limit. Most US lenders apply the 28/36 rule: your housing payment should stay under 28% of gross monthly income, and all your debt payments combined — housing plus car, student loans and card minimums — under 36%.

That second number, the debt-to-income ratio (DTI), is the one that actually binds. It is why paying down a car loan can raise your home budget more than a raise would: every dollar of existing debt payment comes straight out of the 36% before a single dollar reaches your mortgage. Try it above — drop the "other debt payments" field and watch the affordable price jump.

Why the Bank's Maximum Is Not Your Budget

Here is the trap the calculator is designed to expose: the price it shows is a ceiling, not a target. Borrowing the full 36% leaves you "house poor" — technically a homeowner, practically unable to save, invest or absorb a shock.

The number the bank approves ignores everything that is not a debt: groceries, childcare, pensions, a life. A payment that looks fine on the DTI can still crowd out your retirement contributions and leave nothing for the emergency fund that a house makes more necessary, not less. A boiler, a roof and a burst pipe are now your problem, and they do not wait for payday.

A More Honest Target

Many people who stay financially comfortable aim well below the maximum — keeping total housing costs closer to 25% of gross income, or budgeting from take-home pay rather than gross. Run the number both ways: once at the lender's 36%, once at a DTI you would actually be relaxed living with. The gap between them is your margin of safety.

The Costs the Sticker Price Hides

Affordability is not the price — it is the monthly payment, and the payment is bigger than principal and interest alone. This calculator folds in property tax and insurance, but ownership carries more:

• Maintenance: a common rule of thumb is roughly 1% of the home's value per year, averaged over time. It is lumpy and unavoidable.
• Closing costs: paid upfront and, in many countries, brutal. Budget them separately from the down payment.
• The rate: affordability is savagely sensitive to the mortgage rate. A two-point move can swing your budget by tens of thousands. See exactly how in our mortgage calculator.

A Worked Example: Two Buyers, Same Salary

Say two people each earn €5,000 gross a month. On paper, identical budgets. In practice, wildly different ones.

Buyer A has no other debt. Their entire 36% — €1,800 a month — can go to housing. Buyer B carries a €500 car payment and €200 in card minimums. That €700 comes off the top, leaving only €1,100 for housing. At the same rate and term, Buyer A can afford a home worth tens of thousands more than Buyer B — on the exact same income. The lesson is not "earn more"; it is "carry less". Clearing debt before you apply is often the fastest way to a bigger, cheaper mortgage.

Now stress-test it. Both buyers should ask: what happens to the payment if rates are one point higher when I actually lock, or if one income disappears for six months? A budget that only survives the best case is not a budget — it is a bet. Model the rate shock in the mortgage calculator before you commit.

Affordability Rules Vary by Country

The 28/36 rule is American. Elsewhere the cap is defined differently, and often more strictly:

In much of Europe, lenders and regulators anchor on a single debt-service ratio — commonly around 35% of gross (or net) income for all loan payments combined, insurance included. The mechanics of this calculator work the same way; just set the DTI field to your market's limit. And before deciding to buy at all, the deeper question is whether buying beats renting for your timeline — our rent vs buy calculator answers that.

This tool is educational and not personalised financial advice or a mortgage offer. Actual approval depends on your credit, employment, the specific lender's rules and local regulation.