Home Affordability Calculator
Find out how much house you can afford based on your income, debts, and down payment. Uses the 28/36 DTI rule to calculate your maximum home price with a full payment breakdown including taxes, insurance, and PMI.
Quick examples:
Car payments, student loans, credit card minimums, etc.
20% down avoids PMI. Less than 20% requires private mortgage insurance.
Applied when down payment is less than 20% of home price
Your Home Affordability
Maximum Home Price
Monthly Payment
Loan Amount
Front-End DTI
Total Interest
A reasonable stretch. Budget carefully for maintenance and emergencies.
PMI Required: Your down payment is 17.5% of the home price (under 20%). You'll pay $98/mo in private mortgage insurance.
Monthly Payment Breakdown
Loan Type Comparison
| Loan Type | Rate | Max Home Price | Monthly P&I | Total Interest |
|---|---|---|---|---|
| 15-Year Fixed | 5.75% | $246,000 | $1,628 | $96,969 |
| 20-Year Fixed | 6.13% | $261,000 | $1,527 | $155,462 |
| 30-Year Fixed(selected) | 6.5% | $286,000 | $1,492 | $301,005 |
Loan Amortization
(30 years)Related Calculators
How This Calculator Works
This home affordability calculator determines how much house you can afford using the industry-standard 28/36 DTI (debt-to-income) rule. It considers your income, existing debts, down payment, and all housing costs including property taxes, insurance, HOA fees, and PMI.
Front-End Ratio (28%)
Housing Payment ≤ 28% × Gross Monthly Income
Your total monthly housing costs (principal, interest, taxes, insurance, HOA, and PMI) should not exceed 28% of your gross monthly income. This ensures you have enough income remaining for other expenses.
Back-End Ratio (36%)
(Housing + Debts) ≤ 36% × Gross Monthly Income
Your total monthly debt obligations (housing costs plus car payments, student loans, credit card minimums, etc.) should not exceed 36% of your gross monthly income. If you have significant existing debt, this ratio may be more restrictive.
Monthly Payment Formula
M = P × [r(1+r)²] / [(1+r)² - 1]
The calculator uses the standard amortization formula where M is the monthly payment, P is the loan principal, r is the monthly interest rate, and n is the total number of payments. It then uses binary search to find the maximum home price where total housing costs stay within DTI limits.
Tips to Increase Your Buying Power
Reduce Existing Debt
Paying off car loans, credit cards, or student loans before buying reduces your back-end DTI ratio, potentially adding tens of thousands of dollars to your buying power. Even small reductions in monthly debt payments can make a meaningful difference.
Increase Your Down Payment
A larger down payment reduces your loan amount, lowers monthly payments, and eliminates PMI once you reach 20%. Consider delaying your purchase by 6-12 months to save more, or look into down payment assistance programs in your area.
Improve Your Credit Score
A higher credit score qualifies you for better interest rates. Even a 0.5% rate reduction on a $300,000 loan saves about $100/month. Pay bills on time, reduce credit utilization below 30%, and avoid opening new credit accounts before applying for a mortgage.
Shop for Better Rates
Interest rates vary between lenders. Getting quotes from at least three lenders can save you thousands over the life of your loan. Consider mortgage brokers who can compare rates from multiple lenders on your behalf. Also consider buying points to lower your rate if you plan to stay long-term.
What This Calculator Assumes
This calculator provides estimates based on the standard 28/36 DTI rule. Understanding these assumptions will help you interpret the results:
- •Fixed interest rate: The calculation assumes a fixed-rate mortgage. Adjustable-rate mortgages (ARMs) may offer lower initial rates but can change over time.
- •Standard DTI thresholds: Some lenders may approve higher DTI ratios (up to 43% or even 50% for FHA/VA loans). This calculator uses the conservative 28/36 standard for responsible budgeting.
- •No closing costs: The estimate does not include closing costs, which typically run 2-5% of the home price. Budget for these separately.
- •No maintenance costs: Ongoing home maintenance (1-2% of home value annually) is not included in the affordability calculation but should be part of your overall budget.
- •Gross income: Calculations use gross (pre-tax) income, which is standard for mortgage qualification. Your actual take-home pay is lower after taxes.
Disclaimer: This tool provides estimates for educational and planning purposes. It is not financial advice. Actual mortgage approval depends on many factors including credit score, employment history, and lender requirements. Consult with a mortgage professional for personalized pre-approval.
Frequently Asked Questions
How much house can I afford on my salary?
Lenders typically use the 28/36 rule: your housing costs should not exceed 28% of your gross monthly income (front-end ratio), and your total debt payments including housing should not exceed 36% of gross monthly income (back-end ratio). For example, with a $85,000 annual salary, your maximum monthly housing payment would be about $1,983 under the 28% rule.
What is the 28/36 rule?
The 28/36 rule is a guideline lenders use to determine how much mortgage you can afford. The "28" means your monthly housing costs (mortgage payment, property taxes, insurance, HOA, and PMI) should not exceed 28% of your gross monthly income. The "36" means your total monthly debt payments (housing plus car loans, student loans, credit cards, etc.) should not exceed 36% of your gross monthly income. This calculator uses both ratios and takes the more restrictive one.
What is PMI and when do I need it?
Private Mortgage Insurance (PMI) is required by lenders when your down payment is less than 20% of the home price. PMI protects the lender if you default on the loan. Rates typically range from 0.3% to 1.5% of the loan amount annually. Once you reach 20% equity in your home, you can request PMI removal. This calculator automatically includes PMI when your down payment is below 20%.
How much should I save for a down payment?
While 20% down is ideal because it eliminates PMI, many buyers put down 3-10%. FHA loans allow as little as 3.5% down. A larger down payment means a smaller loan, lower monthly payments, and no PMI. However, waiting to save 20% is not always the best strategy if home prices are rising faster than you can save. Use this calculator to compare different down payment scenarios.
What costs beyond the mortgage payment should I budget for?
Homeownership costs beyond your mortgage include property taxes (typically 0.5-2.5% of home value annually), homeowner's insurance ($1,000-3,000+ annually), maintenance and repairs (budget 1-2% of home value per year), utilities, HOA fees if applicable, and PMI if your down payment is under 20%. This calculator includes property taxes, insurance, HOA, and PMI in the affordability calculation.
How does my credit score affect home affordability?
Your credit score directly impacts the interest rate you receive. A higher credit score typically qualifies you for lower rates, which increases your buying power. For example, the difference between a 6% and 7% rate on a $300,000 loan is about $200/month. Scores above 740 generally get the best rates. Improving your credit score before buying can significantly increase how much home you can afford.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher monthly payments but lower interest rates and far less total interest paid. A 30-year mortgage has lower monthly payments, giving you more buying power and cash flow flexibility. For example, on a $300,000 loan, a 30-year at 6.5% costs about $1,896/month but $382,633 in total interest, while a 15-year at 5.75% costs about $2,490/month but only $148,174 in total interest. Use the loan comparison table to see both options.
What is front-end vs back-end DTI ratio?
Front-end DTI (debt-to-income) ratio measures only your housing costs as a percentage of gross monthly income. The recommended maximum is 28%. Back-end DTI includes all monthly debt payments (housing plus car loans, student loans, credit cards) as a percentage of gross income. The recommended maximum is 36%. Lenders look at both ratios, and the more restrictive one determines your maximum affordability.
How do property taxes vary by location?
Property tax rates vary significantly by state and county. States like New Jersey and Illinois average over 2%, while states like Hawaii and Alabama average under 0.5%. The national average is about 1.1%. Higher property taxes reduce your buying power because they increase your monthly housing costs. Check your local county assessor for exact rates. This calculator defaults to 1.1% but allows you to adjust for your area.
Can I afford more house if I have no debt?
Yes, significantly. With no existing debt, the back-end DTI ratio (36%) gives you the full allowance for housing costs. For someone with $85,000 income, eliminating $500/month in debt payments could increase buying power by $70,000-90,000 depending on the interest rate. This is why paying off car loans, student loans, or credit cards before buying a home can substantially increase what you can afford.