What a bank approves isn't what you can afford.
Enter what you earn — a salary or an hourly wage — and this shows two numbers: the house a lender would approve, and the one that keeps housing from crowding out the rest of your life. Or drop in a price you have your eye on and see whether you'd qualify, and the income it would take.
Estimates only, not a pre-approval. Uses the 28% housing-payment limit and 43% total-debt limit as qualifying ratios (a lender may go higher or lower for you); the comfortable line keeps housing at 25% of take-home. Take-home is estimated at ~80% of gross — pull your real number from the paycheck calculator. Taxes and insurance vary widely by state (Texas runs higher). PMI is assumed at 0.55%/yr of the loan under 20% down. Closing costs and the down-payment cash itself aren't modeled here.
How a lender decidesTwo ratios set the ceiling.
A lender doesn't ask what the house costs — it asks what your monthly payment would be against your income. Two rules of thumb do most of the work, and whichever is stricter for you sets the ceiling.
- The 28% front-end ratio.Your full monthly housing payment — principal, interest, taxes, insurance, PMI, HOA — should stay under 28% of your gross monthly income. The lender works backward from that monthly cap to a purchase price using your rate and term, which is why changing either moves the ceiling.
- The 43% back-end ratio.Your housing payment plus every other debt — car, student loans, card minimums — should stay under 43% of gross. Carry a lot of other debt and this one binds first, pulling the house you qualify for down.
- Take-home is the number that pays the bills.Both ratios run on gross pay — before taxes. But you live on take-home. That gap is exactly why the payment a lender allows can quietly squeeze everything else.
The bank is answering "how much can we lend without much risk to us?" — not "how much can this person spend and still save for retirement, absorb a car repair, and take a vacation?" Those are different questions with different answers. This tool shows you both.
The comfortable numberA quarter of your take-home.
The steadier guideline: keep your total housing payment under a quarter of your monthly take-home pay. It's deliberately more conservative than the lender's math, and that's the point — it leaves room for the two jobs your money has: to be there when you need it, and to grow over time.
- It protects your savings rate. Housing is the one bill that, once signed, is hard to shrink for years. Anchor it low and everything downstream — the emergency fund, your employer match, your Roth IRA — stays fundable.
- It absorbs the surprises. Property taxes reassess up. Insurance climbs. A roof fails. The comfortable line leaves margin the lender's ceiling doesn't.
- Qualifying for more is not a reason to spend more. The approval letter is a ceiling. Treat the comfortable number as the plan and the lender max as the do-not-exceed — and give your agent that firm ceiling to shop against, not the pre-approval amount.
CaveatsWhere this estimate is rough.
- It's an estimate, not a pre-approval. A real lender pulls your credit, verifies income and assets, and may stretch or tighten the ratios for your situation. Use this to set expectations before you talk to one.
- Take-home is approximated at ~80% of gross. This tool works from gross income and applies that haircut for you; it assumes federal + FICA with no state income tax. Run the paycheck calculator for your real take-home — if yours runs well under 80% of gross, treat the comfortable number as a little optimistic.
- Taxes and insurance vary by state. The defaults are a rough national middle. Texas property tax and insurance both run higher; some states run far lower. Edit the two rates for where you're buying.
- The down-payment cash and closing costs aren't modeled. This finds the price you can carry monthly — not whether you have the upfront cash. Closing costs typically add 2–5% of the price on top of the down payment.
- PMI is assumed at 0.55%/yr of the loan under 20% down. Your actual rate depends on credit and down payment. On a conventional loan you can request removal at 20% equity, and it cancels automatically at 22%. FHA loans charge MIP instead, at any down payment — with 20% or more down this tool shows $0 mortgage insurance where an FHA loan still pays (roughly 0.5%/yr for 11 years). Under 10% down, MIP lasts the life of the loan; the 1.75% upfront premium isn't modeled either. VA (Veterans Affairs) loans have no monthly PMI at all (a one-time funding fee instead), so this tool overstates a VA payment under 20% down.