Have a specific home in mind? Use your comfortable limit as the home price and check if buying beats renting.
→ Rent vs Buy CalculatorAt 6.5% mortgage rates and median home prices around $400,000, understanding your real affordability limit is more important than ever. This calculator shows you two numbers: the comfortable limit (what you can afford without financial stress) and the bank maximum (the most a lender will approve). The gap between them is real — and knowing it can save you years of budget strain.
The comfortable limit uses the 28% front-end DTI rule: your total monthly housing costs should not exceed 28% of your gross monthly income. The bank maximum uses the 43% back-end rule: all debt payments combined should not exceed 43% of gross income. Most financial advisors recommend staying at or below 28% — the gap between 28% and 43% is money the bank will lend you, but that may leave very little room for emergencies, repairs, or life changes.
Most calculators show only principal and interest. This calculator includes property tax, homeowner's insurance, maintenance (estimated at 1% of home value per year), and PMI if your down payment is below 20%. These additional costs can add $500–$900/month on a typical $400,000 home.
Defaults reflect 2026 U.S. averages: 6.5% mortgage rate, 20% down payment, 1.1% property tax, 0.5% insurance, 1% maintenance. Adjust any input to match your situation — property tax alone ranges from under 0.5% in Hawaii to over 2% in New Jersey.
On a $120,000 annual salary with 20% down at 6.5% interest and $800/month in existing debts, you can comfortably afford around $320,000–$350,000 (at 28% DTI). Your bank may approve up to $430,000–$480,000, but that will stretch your budget significantly.
The comfortable limit (28% DTI) means your housing costs won't exceed 28% of your gross income — a level most households can sustain without stress. The bank maximum (43% DTI) is the ceiling lenders typically allow. The gap between them is real borrowing power that carries real risk.
True monthly cost includes principal and interest, property tax, homeowner's insurance, maintenance, and PMI if applicable. This is more realistic than calculators that show only principal and interest — the difference can be $500–$900/month on a typical purchase.
Most financial advisors recommend staying at or below the comfortable limit. Buying at the bank maximum leaves very little buffer for emergencies, job changes, or repairs. The gap is money you could keep invested or use as a financial cushion.