House Affordability Calculator
How Much House Can You Actually Afford?
A lender will tell you the maximum they're willing to lend. That number and the amount you can comfortably afford are often very different things. This calculator uses the same debt-to-income guidelines lenders use — so you get an honest picture before you start house hunting, not a surprise after you've fallen in love with a property.
How to Use This Calculator
Enter your annual gross income, your existing monthly debt payments (car loans, student loans, minimum credit card payments — not utilities or subscriptions), your down payment, and the interest rate, loan term, property tax rate, and monthly insurance you expect. Hit Calculate Affordability to see your maximum home price, maximum loan amount, and how your budget breaks down.
The 28/36 Rule — How Lenders Think About Affordability
The 28/36 rule is the traditional guideline most conventional lenders apply:
- Front-end ratio (28%) — your total monthly housing costs (principal, interest, property tax, and insurance — PITI) should not exceed 28% of your gross monthly income.
- Back-end ratio (36%) — your total monthly debt payments, including housing, should not exceed 36% of your gross monthly income.
This calculator uses whichever limit is more restrictive. If your existing debts are high, the back-end ratio becomes the binding constraint and reduces how much you can spend on housing.
Real-World Example
Using the defaults — $90,000 income, $500/month in existing debts, $50,000 down, 6.5% rate, 30 years, 1.2% property tax, $150/month insurance:
- Gross monthly income: $7,500
- Max housing cost (28%): $2,100/month
- Max total debt (36%): $2,700/month → $2,200 available for housing after existing $500 debt
- Binding limit: $2,100 (front-end more restrictive)
- Maximum home price: ~$310,000
- Maximum loan amount: ~$260,000
- Front-end DTI: 28%
- Back-end DTI: ~34.7%
Note that with $500 in existing debt, the back-end ratio isn't the constraint here — but add a $400 car payment instead and it becomes one, reducing the maximum home price significantly.
Debt-to-Income Ratio — What Lenders Actually Approve
While 28/36 is the traditional guideline, modern lending is more flexible:
- Conventional loans: typically approve back-end DTI up to 45–50% with strong compensating factors (high credit score, large down payment, significant reserves)
- FHA loans: allow up to 57% DTI in some cases
- VA loans: no hard DTI cap but typically prefer under 41%
Just because a lender will approve a loan doesn't mean you should take the maximum. A mortgage at the top of what you qualify for leaves little room for unexpected expenses, job changes, or rate increases on other variable debt.
What This Calculator Doesn't Include
The maximum home price shown assumes you're stretching to the limit of the affordability rules. For a more conservative real-world budget, also factor in:
- PMI — if your down payment is under 20%, add 0.5–1% of the loan amount per year (~$100–$200/month on a $250,000 loan)
- HOA fees — can add $100–$500+/month in condos and planned communities
- Maintenance and repairs — budget 1–2% of home value per year
- Utilities — typically higher in owned homes than rentals
- Closing costs — typically 2–5% of the purchase price, paid upfront
Frequently Asked Questions
Should I buy at the maximum I qualify for?
Generally no. Lender maximums are the ceiling, not a recommendation. A mortgage payment that leaves you no room for savings, emergencies, or lifestyle expenses is financially fragile. Many financial advisors suggest keeping housing costs below 25% of take-home pay (not gross income) for a comfortable budget.
What counts as monthly debt for this calculation?
Include minimum monthly payments on: car loans, student loans, credit cards, personal loans, child support or alimony, and any other recurring debt obligations. Do not include: utilities, phone bills, streaming services, groceries, or insurance (other than existing debt-type obligations). Lenders use minimum required payments, not what you actually pay.
How does my credit score affect affordability?
Your credit score doesn't change the DTI calculation directly, but it significantly affects the interest rate you'll be offered. A rate difference of 0.5–1% on a $300,000 mortgage changes your monthly payment by $90–$180 and your total interest by $30,000–$60,000 over 30 years. Improving your credit score before applying can meaningfully increase what you can comfortably afford.
What is PMI and how do I avoid it?
Private Mortgage Insurance protects the lender (not you) if you default. It's typically required when your down payment is less than 20% of the purchase price and costs 0.5–1.5% of the loan amount per year. You avoid it by putting 20% down, or by using a piggyback loan (80/10/10 structure). PMI can also be removed once you've reached 20% equity through payments or appreciation.
How much should I save for a down payment?
20% is the traditional target — it eliminates PMI and results in a lower monthly payment and less total interest. But it's not always necessary or optimal. Programs exist for 3–5% down (conventional) and 3.5% down (FHA). Use our down payment calculator to model different scenarios, and pair it with our mortgage calculator to see the full monthly payment at each down payment level.