How Much House Can I Afford?

Buying a home is emotional, but banks strictly look at the numbers. Here is exactly how they calculate what they will lend you.

The Golden Rule: 28/36 (Or 33%)

Most lenders use the Debt-to-Income (DTI) ratio. The standard rule is 28/36:

• 28% (Front-End Ratio): Your monthly mortgage payment (principal, interest, taxes, insurance) should not exceed 28% of your gross monthly income.
• 36% (Back-End Ratio): Your total monthly debt payments (mortgage + car loans + credit cards + student loans) should not exceed 36% of your gross income.

The Stress Test (+2%)

Even if rates are 4% today, the bank will simulate: Can you afford this loan at 6%? If the answer is no, they will reduce the loan amount.

Salary to Home Price Table

Estimated figures. Use our calculator for precision.

Don't Forget Closing Costs

Remember you need savings for the Down Payment (usually 20%) and Closing Costs (2-5% in US/UK, 10% in Spain/France).

Calculate My Affordability Now