Home Affordability Calculator
Estimate the maximum home price you can afford from income, debts, down payment, rate and term — using the standard 28/36 lending rule. Free tool.
About the Home Affordability Calculator
How much house can you actually afford? Lenders answer with two ratios, and this calculator applies both. The front-end rule caps your housing payment at about 28% of gross monthly income; the back-end rule caps all debt payments — housing plus car loans, personal loans, card minimums — at about 36%. Your maximum payment is whichever cap is lower, and both thresholds are editable because banks differ.
From that payment the calculator works backwards through the amortization formula to the largest loan it supports — loan = payment × ((1+r)ⁿ − 1) ÷ (r(1+r)ⁿ) — and adds your down payment to reach the maximum home price. Example: on 300,000 gross monthly income with 30,000 of existing debt payments, the caps are 84,000 (28%) and 78,000 (36% minus debts), so 78,000 is the budget; at 11% over 20 years that supports a loan of about 7.56 million, plus a 2,000,000 down payment ≈ 9.5 million home price.
The tool also shows how the answer moves at ±1% on the interest rate — rate sensitivity is dramatic on 20-year terms, a fact anyone comparing KIBOR-linked bank financing in Pakistan or home loans in India knows well. Results are a planning guide; lenders apply their own criteria, valuations and fees.
How to Use the Home Affordability Calculator
- 1Enter your gross monthly income and existing monthly debt payments.
- 2Enter your saved down payment.
- 3Set the interest rate and loan term (adjust the 28/36 limits if your bank differs).
- 4Read your maximum home price, loan amount and monthly payment.
Frequently Asked Questions
How is home affordability calculated with an example?
Take the lower of two caps: 28% of gross income for housing, or 36% of income minus existing debt payments. On 300,000/month income with 30,000 debts: min(84,000, 78,000) = 78,000. At 11% for 20 years that payment supports roughly a 7.56 million loan; add a 2 million down payment for a ~9.5 million maximum price.
What is the 28/36 rule?
A lending guideline: housing costs should stay within 28% of gross monthly income (front-end ratio), and all debt payments within 36% (back-end ratio). It leaves room for living costs, savings and surprises. Banks vary — some stretch the back-end to 40%+ for strong applicants — which is why both limits are editable here.
How much does the interest rate change what I can afford?
Enormously on long terms. A 78,000 monthly budget over 20 years supports about 8.1 million of loan at 10%, 7.56 million at 11% and 7.0 million at 12% — roughly 7–8% less buying power per extra percentage point. The built-in ±1% table shows your own numbers.
How big a down payment do I need?
Banks in Pakistan typically finance 70–85% of the property value, so plan a 15–30% down payment; similar loan-to-value caps apply in India and elsewhere. Beyond meeting the bank's minimum, every extra rupee of down payment adds directly to your price ceiling and cuts interest for the whole term.
Why do my existing loans reduce how much house I can buy?
Because the back-end cap counts them. With 300,000 income, the 36% rule allows 108,000 of total debt payments; existing payments of 30,000 leave only 78,000 for housing. Clearing a 15,000/month car loan before applying would raise the housing budget to 84,000 (the front-end cap) — roughly 580,000 more loan at 11%/20y.