House Affordability | FHA, VA & Conventional

Q: What is the 28/36 rule and how does it compare to FHA and VA limits?

The 28/36 rule is the conventional underwriting standard. The 28% front-end ratio caps your housing costs (principal, interest, taxes, insurance, HOA, and PMI) at 28% of gross monthly income. The 36% back-end ratio caps all debt payments at 36%. FHA loans are more lenient at 31/43, which means you can qualify for a larger loan, but you'll pay mortgage insurance (MIP) for the life of the loan. VA loans have no front-end limit and a 41% back-end cap, with no monthly insurance at all. This calculator lets you compare all three side by side so you can see the real tradeoffs.

Q: What is PMI, and how is it different from FHA MIP and VA funding fees?

Conventional PMI kicks in when your down payment is less than 20% of the home price. It typically costs about 0.5% of the loan amount per year and goes away once you reach 20% equity. FHA MIP has two parts: a 1.75% upfront premium (financed into your loan) plus a 0.55% annual premium that stays for the life of the loan if you put down less than 10%. VA loans charge no monthly insurance, but there's a one-time funding fee (2.15% for first-time users, less with a larger down payment). Veterans with a service-connected disability are exempt from the fee entirely. The calculator factors all of these into the affordability math automatically.

House Affordability Calculator: Compare Conventional, FHA & VA Loans

Maximum home price under Conventional 28/36, FHA 31/43, and VA 41% back-end, with PMI/MIP, closing costs, taxes, and a 2-point rate stress test built in.

What This Calculator Does

This calculator works backwards from each loan program's DTI ceiling to the largest home price that still fits, given your income, debts, down payment, and the local tax-and-insurance load. It compares Conventional (28/36), FHA (31/43), and VA (41% back-end) side by side and reports which constraint, front-end or back-end DTI, is the binding limit. Enter your income, monthly debts, down payment, interest rate, property taxes, insurance, and HOA fees; results include the maximum home price for each program, a first-month payment breakdown, total cash needed at closing, and the binding DTI.

Who it helps:

First-time and repeat homebuyers who want a realistic price ceiling before shopping, not the inflated number a lender might approve.
What it outputs:

Maximum home price per loan type, monthly payment breakdown (P&I, taxes, insurance, PMI/MIP, HOA), total cash at closing, and the binding DTI constraint.
Limitations:

Uses national-average defaults for PMI and MIP rates. Does not model state-specific programs, jumbo-loan limits, or lender overlays beyond standard DTI ratios.

How the Math Works

The calculator applies front-end and back-end DTI limits to your gross monthly income:

\text{Front-End Limit} = \text{Gross Monthly Income} \times \text{DTI}_{\text{front}}

\text{Back-End Limit} = (\text{Gross Monthly Income} \times \text{DTI}_{\text{back}}) - \text{Monthly Debts}

The binding constraint is whichever limit is lower. The tool then works backward from that maximum housing payment, subtracting taxes, insurance, HOA, and any mortgage insurance, to solve for the largest loan principal that fits, and adds the down payment to arrive at the home price.

Worked Example:

$100K income ($8,333/mo), $500/mo debts, Conventional: front-end limit = $2,333, back-end limit = $2,500. Binding = $2,333. After taxes/insurance/PMI, max price ≈ $360K at 6.8%.
PMI/MIP Inclusion:

Mortgage insurance is deducted from the available payment before solving for principal, so the price already accounts for that extra monthly cost.
Stress Test:

Toggle +2% to rerun the math at a higher rate. A 2-point jump typically reduces the affordable price by $75K–$100K.

How to Use This Calculator

Enter your gross annual household income and all existing monthly debt payments (car loans, student loans, credit-card minimums). Set your available down-payment percentage, expected mortgage rate, loan term, property-tax rate, homeowners-insurance estimate, and any HOA fees. Select which loan types to compare: Conventional, FHA, VA, or all three. The results panel shows the maximum home price for each program, a first-month payment breakdown, total cash needed at closing, and which DTI ratio (front-end or back-end) is limiting your buying power.

Income & Debts:

Income sets the DTI ceiling; each dollar of monthly debt directly reduces the back-end limit and your affordable price.
Down Payment & Rate:

A larger down payment eliminates PMI (at 20%+) and raises the price ceiling. A lower rate increases it further.
Stress Test Toggle:

Recalculates everything at +2% to show whether your budget holds if rates move before closing.

How Loan Type Changes What You Can Afford

Conventional Loans (28/36 Rule)

The conventional 28/36 standard is the most widely used guideline for mortgage affordability. It limits housing costs to 28% of gross income (front-end) and total debt to 36% (back-end).

DTI Limits:

28% front-end, 36% back-end
PMI:

Required when the down payment is below 20% of the home price (typically 0.5% of the loan per year). Removed once you reach 20% equity.
Best For:

Buyers with at least 5% down and solid credit who want to avoid long-term mortgage insurance
Example:

On $100K income with $500/month debt, the conventional ceiling is roughly $360K depending on rate and taxes

FHA Loans (31/43 Rule)

FHA loans allow higher DTI ratios, which means you may qualify for a more expensive home. The tradeoff is mandatory mortgage insurance that lasts the life of the loan for most borrowers.

DTI Limits:

31% front-end, 43% back-end
Upfront MIP:

1.75% of the loan amount, financed into the loan (adds to your balance)
Annual MIP:

0.55% of the loan per year, added to your monthly payment. Does not drop off for loans with less than 10% down.
Best For:

First-time buyers, lower credit scores, or buyers with limited savings for a down payment (minimum 3.5% down)

VA Loans (41% Back-End Only)

VA loans have no front-end DTI limit at all and no monthly mortgage insurance, making them the most flexible option for eligible veterans and service members.

DTI Limit:

41% back-end only. No front-end limit.
Funding Fee:

2.15% for first-time use (0% down), reduced with larger down payments. Subsequent use: 3.3%. Waived for veterans with service-connected disabilities.
No Monthly Insurance:

Unlike conventional PMI or FHA MIP, VA loans carry no monthly insurance premium
Best For:

Eligible veterans and active-duty service members, especially those with limited savings for a down payment

Understanding the 28/36 Underwriting Standard

The Front-End Limit

The front-end DTI ratio caps your total housing payment at a percentage of your gross monthly income. For conventional loans, that's 28%. For FHA, it's 31%. VA loans have no front-end cap.

Calculation:

$\text{Front-End Limit} = \text{Gross Monthly Income} \times \text{DTI \%}$
What Counts:

Principal, interest, property taxes, homeowners insurance, HOA fees, and any mortgage insurance (PMI or MIP)
Example:

At $100,000/year ($8,333/month), the conventional front-end limit is $2,333/month for housing

This is often the binding constraint for higher-income earners with little other debt.

The Back-End Limit

The back-end DTI ratio caps your total monthly debt load (housing plus everything else) at a percentage of gross income, minus your existing debts.

Calculation:

$\text{Back-End Limit} = (\text{Gross Monthly Income} \times \text{DTI \%}) - \text{Monthly Debts}$
What Counts:

Housing payment + car loans + student loans + credit card minimums + any other recurring debt
Example:

At $100,000/year with $500/month in debts, the conventional back-end limit for housing is $2,500/month ($3,000 - $500)

This is usually the binding constraint for buyers carrying car loans, student debt, or credit card balances.

The Affordability Ceiling

The calculator takes the lower of the front-end and back-end limits, then works backward to find the highest home price that fits within that budget after taxes, insurance, HOA, and any mortgage insurance.

Bottleneck Identified:

The results tell you whether income or debt is the limiting factor, so you know where to focus
Closing Costs:

Shown separately as additional cash needed at closing (default 3%), not deducted from your down payment
PMI/MIP Included:

Mortgage insurance is factored into the affordability equation, so the home price already accounts for that extra monthly cost
Down Payment Impact:

A larger down payment reduces the loan (and potentially eliminates PMI), letting you qualify for a higher-priced home

Stress Test and Rate Sensitivity

Stress Test (+2% Rate Increase)

The built-in stress test recalculates your affordability assuming rates jump 2 percentage points above your current input. This is a straightforward way to check whether your budget has any margin.

Why It Matters:

Rates can move between pre-approval and closing. A stress test shows whether a rate spike would push you over the edge.
Typical Impact:

A 2% increase can cut your affordable home price by $75,000 to $100,000
Example:

At 6.8%, you might afford $380K. At 8.8%, that could drop to $310K or less

Some lenders and many financial advisors recommend stress testing as a standard part of the home search.

Rate Sensitivity

Small changes in interest rates have an outsized effect on both your monthly payment and the total you'll pay over the life of the loan.

Monthly Impact:

A 1% rate increase adds roughly $50-70/month for every $100K borrowed
Affordability Impact:

That same 1% can reduce your affordable home price by $30,000-$50,000
Total Cost:

Over 30 years, a 1% rate difference can add $30,000-$50,000 in interest payments

Hidden Costs That Affect Your Real Budget

Taxes, Insurance, and HOA

These costs are included in your DTI calculation but are easy to underestimate. Together, they can consume 15-25% or more of your total monthly housing payment.

Property Taxes:

Typically 1-2% of home value per year. In high-tax states (Texas, New Jersey, Illinois), it can reach 2-3%.
Homeowners Insurance:

Usually $1,200-$2,400/year. In coastal or wildfire-prone areas, premiums can be $3,000 or higher.
HOA Fees:

Anywhere from $0 to $500+/month. This is factored into the affordability calculation if you enter an amount.
Why It Matters:

High taxes or insurance can knock $50,000 or more off your affordable home price without any change to your income or debt

The calculator shows the exact first-month breakdown: principal, interest, taxes, insurance, HOA, and mortgage insurance.

Maintenance and Repairs

Lenders don't account for maintenance in their approval, but your budget needs to. The standard guideline is 1-1.5% of the home's value per year.

Default:

The calculator uses 1.5% annually (adjustable). On a $400K home, that's $6,000/year or $500/month.
What It Covers:

Roof repairs, HVAC replacement, plumbing, appliances, painting, and landscaping. Some years you spend nothing. Some years you spend a lot.
Not in the DTI:

Maintenance is shown as informational in the results. It's not part of the DTI calculation, but it's real money that has to come from somewhere.

House Affordability Calculator FAQ

What is the 28/36 rule and how does it compare to FHA and VA limits?

The 28/36 rule is the conventional underwriting standard. The 28% front-end ratio caps your housing costs (principal, interest, taxes, insurance, HOA, and PMI) at 28% of gross monthly income. The 36% back-end ratio caps all debt payments at 36%. FHA loans are more lenient at 31/43, which means you can qualify for a larger loan, but you'll pay mortgage insurance (MIP) for the life of the loan. VA loans have no front-end limit and a 41% back-end cap, with no monthly insurance at all. This calculator lets you compare all three side by side so you can see the real tradeoffs.

How do my current debts reduce my home-buying power?

Every dollar of monthly debt eats directly into your back-end DTI limit. If you earn $8,333/month gross, your conventional back-end limit is $3,000 (36%). With $500/month in car and student loan payments, only $2,500 remains for housing. That can knock $50,000 to $100,000 or more off your affordable home price. The calculator shows the exact dollar impact under "What's Limiting Your Buying Power?" so you can decide whether paying down debt is worth more than saving for a bigger down payment.

What is PMI, and how is it different from FHA MIP and VA funding fees?

Conventional PMI kicks in when your down payment is less than 20% of the home price. It typically costs about 0.5% of the loan amount per year and goes away once you reach 20% equity. FHA MIP has two parts: a 1.75% upfront premium (financed into your loan) plus a 0.55% annual premium that stays for the life of the loan if you put down less than 10%. VA loans charge no monthly insurance, but there's a one-time funding fee (2.15% for first-time users, less with a larger down payment). Veterans with a service-connected disability are exempt from the fee entirely. The calculator factors all of these into the affordability math automatically.

What happens to my affordability if interest rates rise by 2%?

A 2% rate jump can reduce your buying power by $75,000 to $100,000. On a $400,000 loan at 6.8%, your monthly P&I is about $2,606. At 8.8%, it jumps to roughly $3,155, an extra $549 a month. The calculator includes a Stress Test toggle that recalculates everything at +2% so you can see whether your budget holds up if rates move before you close.

What costs does the calculator include beyond the mortgage payment?

The calculator accounts for property taxes, homeowners insurance, HOA fees, PMI or MIP (depending on loan type), and closing costs (typically 2-5% of the home price). It also estimates monthly maintenance at a rate you can adjust (default 1.5% of home value per year). The results show your total cash needed at closing (down payment plus closing costs plus any financed upfront fees) so there are no surprises when you sit down at the table.

Why does the bank say I can afford more than this calculator shows?

Banks approve loans up to 43-50% DTI. They're answering one question: will this borrower repay? They don't factor in groceries, daycare, the furnace, or vacations. This calculator defaults to conventional 28/36, which leaves room for everything else. Switch to FHA (31/43) or VA (41% back-end) to see the more aggressive end of the scale.

House Affordability Calculator: See how much house you can afford

Loan program

Income & savings

Mortgage & costs

What limits buying power

Where the Affordable Price Actually Comes From

What Changes the Ceiling Most

Loan Type

PMI vs MIP

Maintenance Budget

Debt vs Down Payment