Enter your gross monthly income, existing debts, and down payment. The 28/36 rule tells you the maximum home price a lender will likely approve — and whether your target property fits.
A household earning $8,000/month gross with $400/month in existing debts and $84,000 saved for a down payment applies the 28/36 rule: the housing cap is $2,240 (28%) and the total-debt cap leaves $2,480 for housing (36% × $8,000 − $400). The binding constraint is $2,240/month.
At a 6.8% rate over 30 years, $2,240/month services a loan of about $342,000. Add the $84,000 down payment and the maximum affordable price is roughly $426,000. A $420,000 target passes comfortably; a $500,000 target would require either more income, fewer debts, or a larger down payment.
The 28/36 rule is a conservative lending guideline used by most conventional mortgage programmes. "28" means your total monthly housing cost (principal, interest, taxes, insurance) should stay below 28% of gross monthly income. "36" means all debt payments combined — housing plus car loans, student loans, credit card minimums — should not exceed 36%.
r is the monthly rate (annual APR ÷ 12), n is the total months (years × 12). The chart shows how each monthly payment splits between principal repayment and interest over the life of the loan — early payments are mostly interest; later payments are mostly principal.
Note: this calculator does not include property taxes, home insurance, or HOA fees. If these are significant in your area, reduce the target price by roughly 0.5–1% of the purchase price per year to leave headroom.
The 28/36 rule says your monthly housing cost should not exceed 28% of gross monthly income, and all monthly debt payments combined should not exceed 36%. It is the most widely used conservative affordability benchmark for conventional mortgages.
It finds the tighter of the two rule limits, uses that as the maximum monthly mortgage payment, then solves the amortisation formula backwards (the affordableLoan function) to find the loan that produces that payment. Adding your down payment gives the maximum purchase price.
Lenders typically count PITI (principal, interest, taxes, insurance) in the 28% housing ratio. This calculator uses only principal and interest. If property taxes and insurance are significant in your area, budget for them separately and enter a slightly lower target price.
Minimum payments on credit cards, auto loans, student loans, and personal loans count. Utility bills, groceries, subscriptions, and insurance premiums do not — only contractual debt obligations.
No. Lenders also examine loan-to-value ratio, credit score, employment history, and cash reserves. Some programmes (FHA, VA) allow higher ratios. The 28/36 rule is a useful planning benchmark — not a lending guarantee.
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