House Affordability Calculator

Find out how much house you can afford based on your income, debts, and down payment.

Income-Based Calculate from your salary
Budget-Based Calculate from monthly budget
Income & Debts
Your gross income before taxes
Car loans, student loans, credit cards, etc.
Loan Details
DTI Ratio Limit
Additional Costs (Annual)
Auto-applied if down < 20%
You Can Afford a Home Up To
$312,500
Maximum Loan: $250,000
Monthly Payment
$1,750
P&I + Taxes + Insurance
Down Payment
$62,500
20%
Front-End DTI
28%
Housing ratio
Back-End DTI
36%
Total debt ratio

Your Debt-to-Income Position

0% (Excellent) 28% 36% 43% 50%+ (Risky)

Monthly Payment Breakdown

Affordability by DTI Rule

Your Budget
How much you want to spend on housing monthly
Loan Details
Estimated Costs (Annual)
Of home value per year
Based on Your Budget, You Can Afford
$280,000
Maximum Loan: $224,000
Monthly P&I
$1,416
Monthly Taxes
$257
Monthly Insurance
$117
Down Payment
$56,000

Budget Allocation

Understanding Home Affordability

Determining how much house you can afford is one of the most important steps in the home buying process. Lenders use specific ratios and rules to determine the maximum loan amount they'll approve, but your personal comfort level with monthly payments matters too.

What is the Debt-to-Income Ratio (DTI)?

The debt-to-income ratio is a key metric lenders use to assess your ability to manage monthly payments. It compares your monthly debt payments to your gross monthly income. There are two types of DTI ratios:

Front-End DTI (Housing Ratio): The percentage of your gross monthly income that goes toward housing costs (mortgage payment, property taxes, insurance, HOA fees).

Back-End DTI (Total Debt Ratio): The percentage of your gross monthly income that goes toward all debt payments, including housing costs plus car loans, student loans, credit cards, and other debts.

DTI Ratio Formulas

Front-End DTI = (Monthly Housing Costs / Gross Monthly Income) × 100%

Back-End DTI = (Monthly Housing Costs + Other Debts) / Gross Monthly Income × 100%

Loan Types and Their DTI Requirements

Loan Type Front-End DTI Back-End DTI Down Payment Credit Score
Conventional 28% 36% (up to 45% with strong credit) 3% - 20% 620+
FHA 31% 43% (up to 50% with compensating factors) 3.5% 580+
VA N/A 41% (flexible) 0% No minimum
USDA 29% 41% 0% 640+

The 28/36 Rule Explained

The 28/36 rule is the most common guideline used by conventional lenders:

  • 28% Rule: Your monthly housing costs should not exceed 28% of your gross monthly income
  • 36% Rule: Your total monthly debt payments (including housing) should not exceed 36% of your gross monthly income

Example Calculation

If your annual household income is $75,000:

  • Gross Monthly Income: $75,000 ÷ 12 = $6,250
  • Maximum Housing Payment (28%): $6,250 × 0.28 = $1,750
  • Maximum Total Debt (36%): $6,250 × 0.36 = $2,250
  • If you have $500 in other debts, max housing = $2,250 - $500 = $1,750

Factors That Affect How Much House You Can Afford

1. Interest Rate

The interest rate significantly impacts your purchasing power. Even a 0.5% difference can mean tens of thousands of dollars in home price:

Interest Rate Monthly P&I on $300K Total Interest (30 years)
5.5% $1,703 $313,212
6.0% $1,799 $347,515
6.5% $1,896 $382,633
7.0% $1,996 $418,527

2. Down Payment

A larger down payment reduces your loan amount and may eliminate PMI:

  • 20% Down: No PMI required, lower monthly payment
  • 10% Down: PMI required until 20% equity reached
  • 3.5% Down (FHA): MIP required for life of loan

3. Credit Score

Your credit score affects the interest rate you'll qualify for:

  • 760+: Best rates available
  • 700-759: Good rates
  • 680-699: Fair rates
  • 620-679: Higher rates, may need larger down payment

Hidden Costs of Homeownership

When calculating affordability, don't forget these additional expenses:

  • Property Taxes: Typically 0.5% to 2.5% of home value annually
  • Homeowner's Insurance: Usually 0.3% to 1% of home value
  • PMI: 0.3% to 1.5% of loan amount if down payment < 20%
  • HOA Fees: $100 to $500+ monthly in some communities
  • Maintenance: Budget 1-2% of home value annually
  • Utilities: Often higher than renting
  • Closing Costs: 2-5% of home price (one-time)

How to Improve Your Home Affordability

1. Reduce Existing Debt

Paying down car loans, credit cards, and other debts lowers your back-end DTI, allowing you to qualify for a larger mortgage.

2. Increase Your Down Payment

A larger down payment means a smaller loan, lower monthly payments, and potentially no PMI.

3. Improve Your Credit Score

Even a small improvement in your credit score can result in a lower interest rate, increasing your buying power.

4. Consider a Longer Loan Term

A 30-year mortgage has lower monthly payments than a 15-year, allowing you to afford a more expensive home (though you'll pay more interest overall).

5. Look for Down Payment Assistance

Many states and local governments offer programs to help first-time homebuyers with down payments and closing costs.

Pre-Approval: Your Next Step

Once you have an idea of what you can afford, the next step is getting pre-approved for a mortgage. Pre-approval:

  • Shows sellers you're a serious buyer
  • Gives you an exact loan amount you qualify for
  • Locks in an interest rate for 60-90 days
  • Speeds up the closing process once you find a home
Pre-Qualification vs. Pre-Approval: Pre-qualification is an estimate based on self-reported information. Pre-approval involves a credit check and income verification, making it much more reliable and meaningful to sellers.
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