How the calculator works
Lenders size a mortgage by your debt-to-income ratio (DTI): monthly debt payments divided by gross monthly income. The calculator turns that around. It works out the largest monthly housing payment your chosen DTI limit allows, then finds the highest home price whose full payment fits under it.
- Housing budget. The allowed payment is the smaller of two numbers: the front-end limit times monthly income, and the back-end limit times monthly income minus your other debts.
- Payment at a given price. Principal and interest on (price minus down payment), plus property tax (price times your tax rate, divided by 12), insurance, HOA dues, and PMI if you put down less than 20%.
- Solve for price. The calculator searches for the price where that payment equals your budget, then rounds down to the nearest $1,000.
Worked example
You earn $150,000 a year ($12,500 a month), pay $600 a month on a car loan, have $80,000 for a down payment, and expect a 6.5% 30-year rate, a 1.1% property tax rate, $1,800 a year for insurance and 0.5% PMI.
Under 28/36, the front-end limit is 28% × $12,500 = $3,500, and the back-end limit is 36% × $12,500 − $600 = $3,900. The smaller number, $3,500, sets your housing budget. The highest price that fits is about $508,000: a $428,000 loan at $2,705 in principal and interest, $466 tax, $150 insurance and $178 PMI.
| Limit | Max housing / month | Max price |
|---|---|---|
| 28/36 rule of thumb | $3,500 | $508,000 |
| Fannie Mae manual 36% | $3,900 | $560,000 |
| Fannie Mae manual 45% | $5,025 | $707,000 |
| Fannie Mae DU 50% | $5,650 | $788,000 |
The difference between the cautious and the maximum answer is $280,000 in price, and more than $2,000 a month in payment. That gap is why the lender's number and your comfortable number are often far apart.
The rules behind the limits
- 28/36 is a long-standing rule of thumb, not a regulation. It is a sensible starting point if you also need to save and cover maintenance.
- Fannie Mae allows up to 36% total DTI on manually underwritten loans, up to 45% with the credit score and reserves its Eligibility Matrix requires, and up to 50% for loans run through Desktop Underwriter. Fannie doesn't set a separate front-end limit, so those profiles apply one cap to housing and debts combined.
- Loan size matters too. FHFA's 2026 baseline conforming limit for a one-unit home is $832,750, and up to $1,249,125 in high-cost areas. Above your county's limit you need a jumbo loan.
What to do next
Check your current ratio with the DTI calculator, then price a specific home with the mortgage calculator. Read how much house you can afford in NYC and how PMI works. To check whether your loan size is conforming, use the conforming loan limit checker.