House Affordability Calculator
Find out how much home you can afford based on your income, debts, down payment, and target debt-to-income ratio.
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How to use this calculator
Work backward from the DTI limit: find the maximum allowable monthly housing payment, then convert to a loan amount using the standard mortgage payment formula.
- 1
Enter your combined gross monthly household income.
- 2
Enter all existing monthly debt obligations (car payments, student loans, credit card minimums).
- 3
Enter your available down payment and expected mortgage rate.
- 4
Set the maximum DTI ratio — 36% is conservative; lenders may allow up to 43–50%.
Frequently asked questions
What is the 28/36 rule?
A classic affordability guideline: spend no more than 28% of gross income on housing (front-end DTI) and no more than 36% on all debt obligations combined (back-end DTI). These are guidelines, not hard limits — many lenders allow higher DTIs with strong credit or large down payments.
Does a larger down payment help significantly?
Yes, in three ways: (1) reduces the loan amount, lowering the monthly payment; (2) avoids PMI if you reach 20% down, saving $50–200/month; (3) may qualify you for a lower interest rate. Each additional $10,000 down reduces monthly payment by roughly $60–70 on a 30-year / 7% mortgage.
Should I borrow the maximum I qualify for?
No. Qualifying for a loan and being able to comfortably afford it are different things. Lenders see your gross income; you live on net income. Reserve funds for maintenance (1–2% of home value per year), vacations, emergencies, and retirement contributions. Many financial advisors recommend keeping housing at 25–28% of take-home pay.
What costs are not included in this calculation?
Property taxes (0.5–2.5% of value annually), homeowner's insurance ($1,000–3,000/year), HOA fees (if applicable), PMI (if down payment < 20%), and maintenance/repair costs. Add these to get the true monthly ownership cost.
How much house can you afford?
Down payment strategies
The conventional 20% down payment avoids PMI and gets the best rates, but many buyers put down 3–10% and pay PMI until they reach 20% equity. First-time buyer programs in many countries offer down payment assistance or reduced requirements. Calculate the break-even between paying PMI and putting more cash down — sometimes the higher down payment opportunity cost (money not invested) exceeds the PMI cost.
How interest rates shift affordability dramatically
On a $400,000 home with 10% down ($360,000 loan): at 4% rate, the monthly payment (P&I) is ~$1,718; at 7% it is ~$2,395 — a $677/month difference. Rising from 4% to 7% reduces purchasing power by roughly 25–30%. Use this calculator to see the real-dollar impact of rate changes on your maximum home price.
Pre-approval vs affordability
A mortgage pre-approval tells you the maximum a lender will offer — not the wisest amount to borrow. Pre-approval is based on gross income, while your real budget depends on taxes, savings goals, lifestyle costs, and job security. Getting pre-approved for $500,000 doesn't mean you should spend it. Build your own budget first, then use pre-approval to signal seriousness to sellers.
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →