ReckonBoxHow much house the ratios allow
Affordability in mortgage underwriting is two tests, not one: housing cost against gross income, and total debt against gross income. The conventional pair is 28 and 36, meaning housing stays inside 28% of gross monthly income while everything you owe stays inside 36%. Whichever test bites first is the one setting your price, and knowing which it is changes what you'd do about it.
On $120,000 a year with $650 of other monthly debt and $60,000 saved, at 6.55% over 30 years, the ratios support a purchase price near $393,072 with a housing payment of $2,800 a month. The front-end test allows $2,800. The back-end test, after the $650 of other debt comes out of $3,600, leaves $2,950. The smaller number wins, so here the front-end ratio is binding.
Which lever actually moves the price
When the front-end ratio is binding, paying down other debt does nothing at all to what you can borrow. Housing is capped at 28% of gross income whatever else you owe, so clearing debt that the back-end test already had room for frees no additional housing budget. The number stays at $393,072.
| Change | New price | Difference |
|---|---|---|
| Pay off $200/mo of other debt | $393,072 | $0 |
| Add $10,000 to the down payment | $401,896 | $8,824 |
| Rate 1 point lower | $423,100 | $30,028 |
| Rate 1 point higher | $366,596 | $26,476 less |
A point of interest rate is worth more than three times what an extra $10,000 of cash buys. The live table re-solves the whole calculation for each row, so the figures stay exact even where the mortgage insurance branch makes the relationship bend.
Push the other debt to $1,500 a month and the picture inverts: the price drops to $303,226 and the binding ratio becomes the back-end one. At that point debt paydown is the strongest lever available. Same borrower, same rules, opposite conclusion. That's why this page names the binding test on every result.
About that 43% figure
The 43% debt-to-income ceiling that affordability tools cite as the rule stopped being a rule. The CFPB states that its General Qualified Mortgage final rule "removes the General QM loan definition's 43 percent DTI limit and replaces it with price-based thresholds", which key off how a loan is priced against the average prime offer rate. The agency's own consumer explainer on debt-to-income names no threshold whatsoever and says only that limits differ by loan product and lender.
So 28/36, 31/43 and 41 are underwriting convention and program guidance. Widely applied, and not a legal cutoff you either clear or fail. Lenders approve above them where credit, reserves or down payment compensate.
Where the numbers come from
Housing cost is written as a function of price and then inverted. With k the payment factor r(1+r)^n divided by ((1+r)^n minus 1), the price is the monthly budget minus insurance and HOA, plus the down payment times k plus the PMI rate, all divided by k plus the PMI rate plus the tax rate. Mortgage insurance makes that piecewise, because whether it applies depends on the answer, so both branches are solved and the self-consistent one is kept.
Property tax at 1.1% of price and $1,800 of annual insurance remove $360.32 and $150 from the $2,800 allowance before a dollar reaches the loan, leaving $2,116.21 for principal and interest and $173.48 for mortgage insurance. The 6.55% rate default is the Freddie Mac survey average for the week of 16 July 2026.
What this does not decide for you
Qualifying for a price is not the same as being comfortable at it. These ratios use gross income, ignore childcare, healthcare, retirement saving, maintenance and the cost of the move itself, and say nothing about job security or what you'd want left over. A lender's ceiling is a ceiling, not a target. This tool models the underwriting arithmetic and is not a pre-qualification, an offer, or advice on what to spend. Speak to a licensed mortgage professional about your own circumstances.
Frequently asked questions
How much house can I afford? Lenders answer this with two qualifying ratios: housing cost against gross income, and total debt against gross income. On $120,000 a year with $650 of other monthly debt and $60,000 down at 6.55%, the conventional 28/36 ratios support a price of about $393,072 with a housing payment of $2,800 a month.
What is the 28/36 rule? The 28/36 rule is the convention that housing costs stay within 28% of gross monthly income and total debt payments within 36%. The first figure is the front-end ratio and covers principal, interest, taxes, insurance, HOA and mortgage insurance. The second is the back-end ratio and adds car loans, student loans and minimum card payments.
Is 43% debt-to-income still the legal limit? No. The CFPB states that its General Qualified Mortgage rule removes the 43 percent DTI limit and replaces it with price-based thresholds, so 43% is lender guidance rather than a regulatory cap. The CFPB own explainer on debt-to-income names no threshold at all and says only that limits differ by loan product and lender.
Why did paying off debt not change my price? Because the front-end ratio was binding. Housing is capped at 28% of gross income regardless of what else you owe, so once other debts are small enough that the back-end ratio has slack, clearing more of them frees nothing. On the default figures, paying off $200 a month of debt moves the affordable price by $0, while a rate one point lower moves it by about $30,028.
What is the difference between front-end and back-end ratio? Front-end counts only the housing payment against gross income; back-end counts the housing payment plus every other recurring debt. A borrower with no other debt has the same front-end ratio as one with a $900 car payment, which is exactly why lenders test both.
Does this include property tax and insurance? Yes, and that matters because they come out of the same allowance. Property tax at 1.1% of price and $1,800 of annual insurance take $360.32 and $150 a month out of the $2,800 housing budget on the default figures, leaving $2,116.21 for principal and interest and $173.48 for mortgage insurance.
How is the price actually solved? Housing cost is written as a function of price, then the equation is inverted: price equals the budget minus fixed costs plus the down payment times the payment factor, all divided by the payment factor plus the tax and PMI rates. Because whether PMI applies depends on the answer, both branches are solved and the self-consistent one is used.