How much house can you afford?

Six things behind the answer

1. Why two answers

   Lenders judge affordability with a debt-to-income ratio: your monthly housing payment plus your other debt payments, divided by gross monthly income. Fannie Mae caps it at 36% on manually underwritten loans, 45% with the required credit score and reserves, and 50% through its automated underwriting system, Desktop Underwriter (Selling Guide B3-6-02, April 2025). Manually underwritten FHA loans start at 31% for housing and 43% in total, rising to 40/50 with compensating factors (HUD Mortgagee Letter 2014-02). Those are limits on the lender's risk, not a measure of what you can live on.

2. The 43% rule is gone

   Many sites still say a qualified mortgage can't exceed 43% debt-to-income. The CFPB removed that limit from the General QM definition in a December 2020 rule and replaced it with a price test: a loan qualifies if its APR is within 2.25 percentage points of the average prime offer rate, with higher thresholds for small loans. Lenders have had to use the new definition since October 1, 2022 (CFPB). They must still consider your debt-to-income ratio or residual income; they no longer have to stop at 43%.

3. What counts as a debt

   Fannie Mae's definition of monthly obligations covers installment loans, revolving minimum payments, lease payments, alimony and child support, and other recurring obligations (B3-6-02). Day care, groceries and utilities are not debts, so they do not appear in that ratio. A family paying $1,000 a month for childcare can be approved for the same loan as one paying nothing. That is why the budget answer counts your other fixed costs against the 36% line: housing up to 28% of gross income, and housing, debts and other fixed costs together up to 36%.

4. The rate is live, and it moves

   The default rate is the latest Freddie Mac Primary Mortgage Market Survey average for a 30-year fixed loan, or the 15-year average if you choose a 15-year term, fetched from FRED when the page loads. Your own quote depends on your credit score, down payment, points and lender. Because rates move, the readout reruns your budget answer at one percentage point higher. Before you shop, read APR vs. interest rate.

5. The cash you need beyond the down payment

   On home purchase loans in 2023, lender and settlement charges such as origination fees, discount points, appraisal and title had a median of $6,684, according to the CFPB's analysis of HMDA data. That excludes prepaid interest, the first year of insurance, escrow deposits and any transfer taxes. Below 20% down, this calculator uses the same illustrative mortgage insurance rates as our mortgage calculator (0.55% a year from 10% down up to 20%, 0.75% from 5% up to 10%, 0.95% below 5%). Freddie Mac puts typical PMI at $30 to $70 a month per $100,000 borrowed (Freddie Mac). Keep the emergency fund out of the down payment.

6. What this calculator leaves out

   Maintenance and repairs (1% of the home's value a year is a common rule of thumb, not a measured figure), utilities, commuting costs and income taxes. Loan limits matter too: in 2026 the conforming loan limit for a one-unit home is $832,750 in most of the country and up to $1,249,125 in high-cost areas (FHFA). Above it you need a jumbo loan, and those lenders set their own, often stricter, terms.