House Affordability Calculator
Determine how much house you can afford based on your finances
How to Use This House Affordability Calculator
- Enter your annual gross income (before taxes)
- Input your current monthly debt payments (car, student loans, credit cards)
- Specify your available down payment amount
- Enter the current mortgage interest rate
- Add property tax rate, insurance, and HOA if applicable
- Click 'Calculate Affordability' to see your maximum home price
Example: Household income $120,000/year, $600/month existing debt, $60,000 down payment at 6.5% rate. Max monthly housing: $2,200 (28% of $10,000 gross monthly). After property tax, insurance, HOA, this supports roughly $385,000 home price with $325,000 mortgage.
Tip: Just because you CAN afford a certain price doesn't mean you SHOULD. Staying below your maximum gives you breathing room for unexpected expenses and life changes.
Why Use a House Affordability Calculator?
Lenders will tell you the maximum they'll lend. This calculator helps you determine what you can comfortably afford without becoming house poor.
- Determine your maximum purchase price before house hunting
- Understand how existing debt affects your buying power
- See the impact of different down payment amounts
- Calculate how interest rate changes affect affordability
- Compare affordability at different income levels
- Set a realistic budget that leaves room for life
Understanding Your Results
Your maximum home price is based on the 28/36 rule used by most lenders. Consider staying 10-15% below this for financial flexibility.
| Result | Meaning | Action |
|---|---|---|
| DTI under 28% | Comfortable housing budget | Sustainable long-term; good cushion for unexpected costs |
| DTI 28-33% | Stretching but manageable | Viable if income is stable and rising; budget carefully |
| DTI 33-43% | House-poor territory | Little room for savings, emergencies, or lifestyle; consider less expensive home |
| DTI over 43% | Exceeds most lender limits | Unlikely to qualify; reduce target price or pay off debt first |
Meaning: Comfortable housing budget
Action: Sustainable long-term; good cushion for unexpected costs
Meaning: Stretching but manageable
Action: Viable if income is stable and rising; budget carefully
Meaning: House-poor territory
Action: Little room for savings, emergencies, or lifestyle; consider less expensive home
Meaning: Exceeds most lender limits
Action: Unlikely to qualify; reduce target price or pay off debt first
Note: The 28/36 rule: housing costs under 28% of gross income, total debt under 36%. These are maximums, not targets. Many financial advisors recommend staying at 25% or below.
About House Affordability Calculator
Formula
Max Housing Payment = Monthly Gross Income × 28% | Max Total Debt = Monthly Gross Income × 36% From max housing payment, subtract property tax (1-2% of home value annually), insurance ($1,000-3,000/year typically), and HOA. What remains supports your mortgage principal and interest, determining max loan amount.
Current Standards: Conventional loans accept up to 43% DTI with strong compensating factors. FHA allows up to 50% DTI in some cases. Jumbo loans typically require under 38% DTI. VA and USDA have more flexible DTI guidelines.
Frequently Asked Questions
What's included in the housing payment lenders consider?
PITI: Principal, Interest, Taxes, Insurance. This includes your mortgage payment (P&I), property taxes (often escrowed monthly), homeowners insurance (also escrowed), and PMI if applicable. HOA fees are also counted. Utilities are NOT included in DTI calculations, but you should budget for them—they can add $200-500/month depending on the home and location.
How does existing debt affect how much house I can afford?
Significantly. Every $100 in monthly debt payments reduces your housing budget by roughly $100. Example: $85,000 income allows about $2,000/month for housing under the 28% rule. But if you have $500/month in car and student loan payments, the 36% total debt rule limits your combined payments to $2,550, meaning only $2,050 for housing. Paying off a $400/month car loan can increase your buying power by $50,000+.
Should I buy the most expensive home I can afford?
No. Maxing out your affordability leaves no cushion for repairs, rate increases (if ARM), job loss, or lifestyle wants. Many homeowners recommend buying 10-20% below your maximum. If you can 'afford' $500,000, consider homes at $400,000-450,000. You'll have money for furnishing, maintenance, vacations, and retirement savings. Being house-poor is a miserable way to live in a nice house.
How do interest rates affect affordability?
Dramatically. Each 1% rate increase reduces buying power by roughly 10%. At 6% on a 30-year mortgage, a $2,000/month P&I payment supports a $333,000 loan. At 7%, that same payment only supports a $300,000 loan. At 8%, it's $273,000. This is why rate environment matters so much for home shoppers—the same income buys significantly less home when rates rise.
What about adjustable-rate mortgages to afford more house?
ARMs offer lower initial rates (often 1-2% below fixed rates), increasing affordability. But rates adjust after the initial period (5, 7, or 10 years typically). If rates rise, your payment increases—potentially significantly. Only use an ARM if: you're confident you'll sell or refinance before adjustment, you can afford payments at higher rates, or you're sophisticated about interest rate risk. For most buyers staying long-term, fixed rates provide payment certainty.