Your result
What your result means
With $110,000 of income ($9,167 a month), the 28% housing ratio allows $2,567 and the 36% total-debt ratio leaves $2,800 after your $500 of other debts. The tighter limit is the 28% housing ratio, so your housing budget is $2,566.67. At 6.5%, that supports a loan of about $324,800; adding your $60,000 down payment points to a home price around $384,800.
The math
Formula and sources
Housing budget H = min(0.28 × monthly income, 0.36 × monthly income − other debts) H = f × (price − down) + t × price price = (H + f × down) ÷ (f + t)
- f
- payment per $1 borrowed, from the loan formula at your rate and term
- t
- property tax + insurance rate ÷ 12
- down
- down payment
28/36 is a starting guideline, not a legal limit. Many loan programs allow higher ratios, and your comfortable budget may be lower.
Sources we checked this against
- 1What is a debt-to-income ratio?Consumer Financial Protection Bureau · consumerfinance.gov
- 2What is the 28/36 rule for home affordability?JPMorgan Chase · chase.com
- 3PMT function (payment formula and examples)Microsoft Support · support.microsoft.com
Formula last checked 2026-11-04. Found an error? Tell us and we will fix it.
Step by step
Two worked examples
$72,000 income, no other debt
Max monthly housing payment
$1,680.00
- Gross annual income
- $72,000
- Other monthly debt payments
- $0
- Down payment
- $30,000
- Interest rate
- 6.5%
- Loan term
- 30 years
- Property tax + insurance per year
- 1.6%
- Housing ratio limit
- 28%
- Total debt ratio limit
- 36%
Monthly income is $6,000, so 28% allows $1,680 and 36% allows $2,160. With no other debts the housing limit binds: budget $1,680.00, price about $244,200.
Same income, $600 car and student loans
Max monthly housing payment
$1,560.00
- Gross annual income
- $72,000
- Other monthly debt payments
- $600
- Down payment
- $30,000
- Interest rate
- 6.5%
- Loan term
- 30 years
- Property tax + insurance per year
- 1.6%
- Housing ratio limit
- 28%
- Total debt ratio limit
- 36%
Now 36% × $6,000 − $600 = $1,560 is lower than $1,680, so the 36% total-debt ratio binds. The budget falls to $1,560.00 and the price to about $228,500.
| Result | Example 1 | Example 2 |
|---|---|---|
| Max monthly housing payment | $1,680.00 | $1,560.00 |
| Home price you can afford | $244,200 | $228,500 |
| Total debt-to-income | 28% | 36% |
Questions
Frequently asked questions
What is a debt-to-income ratio?
It is your monthly debt payments divided by gross monthly income. The CFPB’s example: $2,000 of payments on $6,000 of income is a 33% ratio.
Should I include utilities and maintenance?
Lenders don’t, but you should budget for them. A common rule of thumb sets aside 1% to 2% of the home’s value each year for maintenance.
Why does the interest rate change my budget so much?
The housing budget is fixed by your income, so a higher rate means more of it goes to interest and less supports principal. Each percentage point can move the affordable price by roughly 10%.
Can I afford more with FHA or VA loans?
Those programs often allow higher debt-to-income ratios. Raise the ratio limits here to see the effect, but remember a higher ratio leaves less room for savings and surprises.