House Affordability Calculator
Calculate how much house you can afford based on your income, debts, and down payment. Estimate your maximum home price, monthly payments, and get pre-approval guidance.
Related Calculators
About This Calculator
Determining how much house you can afford is one of the most important financial decisions you'll make. This calculator helps you understand your maximum home purchase price based on your income, existing debts, down payment, and current mortgage rates. Understanding your buying power before house hunting prevents heartbreak from falling in love with homes outside your budget.
How Lenders Determine Affordability: Mortgage lenders use debt-to-income (DTI) ratios to determine how much they'll lend you. There are two key ratios:
- Front-End DTI: Housing costs (mortgage, taxes, insurance) divided by gross income
- Back-End DTI: All monthly debts divided by gross income
Key Factors Affecting Affordability:
- Annual gross income (before taxes)
- Existing monthly debt payments
- Down payment amount or percentage
- Current mortgage interest rates
- Property taxes and insurance costs
- Credit score (affects rate and PMI)
Different Loan Types:
- Conventional: Typically requires 3-20% down, stricter DTI limits
- FHA: 3.5% minimum down, more flexible DTI ratios
- VA: 0% down for eligible veterans, no PMI
- USDA: 0% down for rural areas, income limits apply
This calculator estimates your maximum affordable home price. For monthly payment details, use our Mortgage Calculator. For investment properties, see our DSCR Calculator.
How to Use the House Affordability Calculator
- 1Enter your annual gross income (before taxes and deductions).
- 2Input your total monthly debt payments (car loans, student loans, credit cards).
- 3Enter your planned down payment as a percentage or dollar amount.
- 4Adjust the interest rate to current market rates.
- 5Select your preferred loan term (30, 20, or 15 years).
- 6Choose your loan type (Conventional, FHA, VA, or USDA).
- 7Select your credit score range for accurate PMI estimates.
- 8Enter your local property tax rate (typically 0.5-2.5% annually).
- 9Add HOA fees if applicable to homes you're considering.
- 10Review your maximum affordable price and monthly payment breakdown.
Understanding Debt-to-Income Ratios
DTI ratios are the primary tool lenders use to determine affordability.
Front-End DTI (Housing Ratio)
Formula: (Monthly Housing Costs / Gross Monthly Income) × 100
Housing costs include:
- Principal and interest payment
- Property taxes
- Homeowners insurance
- PMI/MIP (if applicable)
- HOA fees
Typical Limits:
| Loan Type | Max Front-End DTI |
|---|---|
| Conventional | 28% |
| FHA | 31% |
| VA | 41% |
| USDA | 29% |
Back-End DTI (Total Debt Ratio)
Formula: (All Monthly Debts / Gross Monthly Income) × 100
Includes housing PLUS:
- Car payments
- Student loans
- Credit card minimums
- Personal loans
- Child support/alimony
Typical Limits:
| Loan Type | Max Back-End DTI |
|---|---|
| Conventional | 36-43% |
| FHA | 43-50% |
| VA | 41% |
| USDA | 41% |
Example Calculation
Income: $85,000/year ($7,083/month) Existing debts: $500/month
Using conventional limits (28%/36%):
- Max housing: $7,083 × 28% = $1,983
- Max total debt: $7,083 × 36% = $2,550
- Max housing (from back-end): $2,550 - $500 = $2,050
Maximum PITI payment: $1,983 (front-end is limiting)
The 28/36 Rule Explained
The 28/36 rule is the traditional guideline for mortgage affordability.
The Rule
- 28%: Maximum percentage of gross income for housing costs
- 36%: Maximum percentage of gross income for total debt
Why These Numbers?
Historical basis:
- Based on decades of mortgage default data
- Borrowers exceeding these thresholds default more often
- Provides cushion for emergencies and savings
Is the 28/36 Rule Still Relevant?
Arguments for:
- Proven track record
- Leaves room for savings and emergencies
- Conservative approach protects buyers
Arguments against:
- Doesn't account for regional cost differences
- High-income earners may have more flexibility
- Many loans now allow higher ratios
Adjusting for Your Situation
Consider lower limits if:
- Irregular income (freelance, commission)
- Saving for retirement is behind
- Planning major expenses (kids, education)
Higher limits may work if:
- Very stable income/employment
- Significant other savings
- High-cost area with limited options
- Income expected to increase
Real-World Application
Many lenders approve loans up to 43-50% DTI, but that doesn't mean you should borrow that much. The 28/36 rule provides financial breathing room.
How Much House Can You Actually Afford?
There's a difference between what you can borrow and what you should borrow.
Lender Maximum vs. Comfortable Payment
Lender approved: $400,000 But should you buy that much?
Consider these factors:
- Emergency fund maintenance
- Retirement savings goals
- Lifestyle expenses
- Future children/education
- Home maintenance costs
- Furniture and setup costs
The True Cost of Homeownership
Beyond the mortgage:
| Expense | Annual Cost |
|---|---|
| Maintenance | 1-2% of home value |
| Repairs | 0.5-1% of home value |
| Utilities | Varies by region |
| Landscaping | $1,200-$3,000 |
| HOA (if applicable) | Varies widely |
For a $350,000 home:
- Maintenance: $3,500-$7,000/year
- Repairs: $1,750-$3,500/year
- Total: $5,250-$10,500/year ($437-$875/month)
A Safer Approach
The 25% Rule: Keep housing costs under 25% of take-home pay (not gross).
Example:
- Gross income: $85,000
- Take-home: ~$65,000 ($5,417/month)
- Max housing: $5,417 × 25% = $1,354/month
This is significantly less than the 28% of gross ($1,983) but leaves much more financial flexibility.
Down Payment Strategies
Your down payment significantly affects affordability and costs.
Minimum Down Payments by Loan Type
| Loan Type | Minimum Down | Notes |
|---|---|---|
| Conventional | 3% | 5% for investment |
| FHA | 3.5% | With 580+ credit score |
| VA | 0% | Eligible veterans |
| USDA | 0% | Rural areas, income limits |
The 20% Down Payment Myth
Pros of 20% down:
- No PMI required
- Lower monthly payment
- Better rates possible
- More equity cushion
Cons of waiting for 20%:
- Years of saving while renting
- Home prices may rise faster
- Missing appreciation gains
- Life circumstances change
PMI Impact Analysis
$300,000 home with 10% down:
- Loan: $270,000
- PMI: ~$140/month
- PMI total (5 years): ~$8,400
Wait 3 years to save 20%?
- Continued rent: $1,500 × 36 = $54,000
- Home appreciation (3%): ~$27,000
- Net cost of waiting: ~$35,000
Strategic Down Payment
Consider putting less down if:
- Emergency fund would be depleted
- Investments earning more than mortgage rate
- Home needs immediate repairs/updates
Put more down if:
- Have excess savings beyond emergency fund
- Hate the idea of PMI
- Want lowest possible payment
Interest Rates and Affordability
Interest rates dramatically impact how much house you can afford.
Rate Impact on Buying Power
$2,000/month budget (P&I only):
| Interest Rate | 30-Year Loan | Home Price (20% down) |
|---|---|---|
| 5.0% | $373,000 | $466,000 |
| 6.0% | $333,500 | $416,900 |
| 7.0% | $300,000 | $375,000 |
| 8.0% | $272,500 | $340,600 |
A 1% rate increase = ~11% less buying power
Current Rate Environment
Rates fluctuate based on:
- Federal Reserve policy
- Inflation
- Economic conditions
- Bond market
Strategies for Higher Rate Environments
Buy now, refinance later:
- Get into the market
- Refinance when rates drop
- Start building equity
Buy down the rate:
- Pay points upfront
- Each point = 1% of loan
- Typically reduces rate 0.25%
Adjustable-rate mortgages (ARMs):
- Lower initial rate
- Rate adjusts after fixed period
- Risk of payment increase
Lock Timing
When to lock:
- Once you're under contract
- When you're comfortable with rate
- Before closing deadline
Lock periods:
- 30 days: Standard
- 45-60 days: New construction
- Longer locks cost more
Location Factors and Affordability
Where you buy significantly impacts total housing costs.
Property Tax Variations
| State | Effective Rate | Tax on $350K Home |
|---|---|---|
| New Jersey | 2.49% | $8,715/year |
| Illinois | 2.27% | $7,945/year |
| Texas | 1.80% | $6,300/year |
| California | 0.76% | $2,660/year |
| Hawaii | 0.28% | $980/year |
Same payment, different home price: A $350K home in NJ costs ~$500/month more than in HI just in taxes!
Insurance Cost Factors
Higher insurance areas:
- Coastal (hurricane risk)
- Wildfire zones
- Tornado alley
- Flood plains
Example insurance variations:
| Location | Annual Premium |
|---|---|
| Florida coastal | $3,000-$8,000 |
| California fire zone | $2,000-$5,000 |
| Midwest | $1,000-$2,000 |
| Northeast | $800-$1,500 |
HOA Considerations
Condo/townhome HOAs:
- $200-$500/month common
- Includes exterior maintenance
- May include amenities
Single-family HOAs:
- $50-$200/month typical
- Maintains common areas
- Enforces community standards
Commute Costs
Don't forget transportation:
- Gas costs
- Vehicle wear
- Time value
- Tolls/parking
A cheaper home 30 miles out may cost more than a pricier home nearby when considering commute expenses.
Pro Tips
- 💡Get pre-approved before house hunting to know your actual budget.
- 💡Keep housing costs under 25% of take-home pay for financial flexibility.
- 💡Budget 1-2% of home value annually for maintenance and repairs.
- 💡Don't empty your savings for the down payment - keep emergency funds.
- 💡Compare the true cost of renting vs. buying in your market.
- 💡Factor in all costs: taxes, insurance, HOA, maintenance, not just mortgage.
- 💡Consider future income changes - job stability, career growth, family plans.
- 💡Shop multiple lenders for the best rates - differences add up over 30 years.
- 💡Avoid major purchases or credit applications before closing.
- 💡Remember that lender approval is the maximum, not the recommendation.
- 💡Consider starting with a smaller home you can upgrade from later.
- 💡Research neighborhood trends, school ratings, and future development.
Frequently Asked Questions
With a $100,000 salary, you can typically afford a home priced between $300,000-$400,000, depending on your debts, down payment, and local taxes. Using the 28% front-end DTI rule, your maximum housing payment would be about $2,333/month. With current rates around 7%, this supports roughly a $350,000 home with 20% down.
