How do I figure out how much house I can afford?

What counts as the housing cost

The 28 percent side covers the full monthly housing bill: mortgage principal and interest, property taxes, homeowners insurance, and any HOA dues. People who budget only the loan payment routinely overshoot, because taxes and insurance can add a meaningful slice on top. The 36 percent side then adds car loans, student loans and card minimums, and whichever limit binds first sets your ceiling.

From monthly budget to purchase price

The same monthly budget buys a very different house at different interest rates, because most of an early mortgage payment is interest. That is why affordability calculators ask for the rate, the term and your down payment: they solve backwards from the affordable payment to a loan size, then add the down payment to get a price range.

Treat 28/36 as a guardrail, not a target

The ratios are lender guidelines and vary by loan program. Buying at the very top of the approved range leaves little room for maintenance, rate changes on future refinancing, or a drop in income. Running the numbers yourself first means the bank pre-approval is a confirmation, not a surprise.

Step by step

1. Enter income and debts. Type gross monthly income and existing monthly debt payments.
2. Add rate and down payment. Use a current mortgage rate and the cash you plan to put down.
3. Read the price range. The calculator applies the 28/36 limits and shows the affordable home price.
4. Check the property taxes. Estimate the yearly tax bill for the area with a property tax calculator so the monthly figure is realistic.