House Affordability Calculator

Your Financial Details

Enter your financial details to calculate how much house you can afford.

Annual Income ($)

Please enter a valid annual income

Gross income before taxes from all sources

Monthly Debt Payments ($)

Please enter a valid monthly debt amount

Car loans, student loans, credit card minimums

Down Payment ($)

Please enter a valid down payment

Down Payment Percentage

10%

20% or more avoids Private Mortgage Insurance (PMI)

Interest Rate (%)

Please enter a valid interest rate

Loan Term

Property Tax Rate (%)

Please enter a valid property tax rate

National average: 0.5-1.5%

Annual Home Insurance ($)

Please enter valid insurance amount

Debt-to-Income Limit (%)

Lenders typically cap total debt payments at 43% of income

Affordability Results

Calculate and view your home buying budget

Your Affordability Results

Maximum Affordable Home Price

$350,000

Estimated Monthly Payment

$2,217

Loan Amount

$315,000

Down Payment

$35,000

Interest Rate

6.75%

Debt-to-Income Ratio

37.2%

Monthly Payment Breakdown

Principal & Interest $1,805

Property Tax $350

Insurance $100

PMI $197

How It Works

Calculate your maximum affordable home price based on income, existing debts, down payment, and local costs using standard lending guidelines.

Smart Home Buying

Compare different down payment amounts, loan terms, and interest rates to find the best mortgage options that fit your financial situation.

Privacy First

All calculations happen in your browser - no personal or financial data is sent to servers. Your information stays completely private.

How the House Affordability Calculator Works

Before you fall in love with a house that's financially out of reach, use this calculator to determine what you can actually afford. A home is likely your largest purchase, and understanding your true budget—based on income, existing debts, down payment, and local costs—prevents future strain. First-time buyers, upsizers, and relocating families all benefit from this clear financial snapshot.

Step-by-Step Calculation Process

Input Your Financial Picture: Enter your total household income, existing monthly debt obligations, available down payment savings, and your target down payment percentage.
Set Mortgage Parameters: Choose your expected interest rate based on current market conditions and your credit profile. Select a loan term—typically 15 or 30 years.
Account for Property Costs: Estimate annual property taxes (usually 0.5-2% of home value) and homeowners insurance.
Apply Lender Debt-to-Income (DTI) Limits: The calculator uses standard lending guidelines, typically limiting your total monthly debt payments (including the new mortgage) to 43% of your gross monthly income.
Calculate Maximum Monthly Payment: Subtract your existing debt payments from your maximum allowed monthly debt payment to determine how much you can allocate toward your new housing payment.
Separate Payment Components: The calculator breaks down your maximum housing payment into four parts: principal and interest, property taxes, homeowners insurance, and PMI (if down payment is less than 20%).
Determine Maximum Loan Amount: Using the mortgage payment formula, the calculator works backward from your maximum principal and interest payment to determine the largest loan you can qualify for.
Calculate Final Home Price: Your maximum affordable home price equals the maximum loan amount plus your available down payment.

Practical Example: First-Time Home Buyer

Sarah, a teacher, earns $68,000 annually. She has $350 in monthly student loan payments and has saved $32,000 for a down payment. She's looking in an area with 1.1% property taxes.

Step 1: Calculate Monthly Income

Calculation: $68,000 ÷ 12 = $5,667 monthly income

Step 2: Determine Maximum Payment (43% DTI)

Calculation: $5,667 × 0.43 = $2,437 maximum total debt payments

Step 3: Calculate Available for Housing

Calculation: $2,437 - $350 = $2,087 available for housing payment

Step 4: Final Result

Result: Sarah can afford a home up to $301,500 with a $2,255 monthly payment

House Affordability Formulas

Maximum Monthly Payment (Based on DTI)

Max Monthly Payment = (Monthly Gross Income × DTI Ratio) - Existing Monthly Debts

DTI Ratio is expressed as a decimal (e.g., 0.43 for 43%)

Monthly Principal & Interest Payment

M = P × [r(1+r)^n] / [(1+r)^n - 1]

M = Monthly payment, P = Loan amount, r = Monthly interest rate, n = Number of payments

Maximum Loan Amount Calculation

Max Loan = M × [(1+r)^n - 1] / [r(1+r)^n]

The inverse of the mortgage payment formula, solving for P instead of M

Maximum Home Price

Max Home Price = Maximum Loan Amount + Down Payment

Your total purchasing power including all available funds

Step-by-Step Examples

First-Time Home Buyer in Medium-Cost Area

$68,000 income, $350 monthly debt, $32,000 down, 6.5% interest, 30 years, 1.1% property tax

Maximum home price: $301,500 | Monthly payment: $2,255

Dual-Income Family Upsizing

$145,000 income, $800 monthly debt, $120,000 down (20%), 6.25% interest, 30 years, 1.3% property tax

Maximum home price: $600,000 | Monthly payment: $3,756

Conservative Budget with 15-Year Mortgage

$95,000 income, $500 monthly debt, $50,000 down, 5.75% interest, 15 years, 1.0% property tax

Maximum home price: $350,000 | Monthly payment: $2,450

Understanding House Affordability

Calculating house affordability helps you establish a realistic budget before starting your home search. This calculator determines your maximum home price, monthly payment, and loan details based on your income, debt, down payment, interest rate, and local costs. Whether you're a first-time buyer, relocating, or upsizing, understanding these numbers prevents overborrowing and financial strain.

Key Factors in Home Affordability

Several elements significantly impact your home purchasing power:

Income: Your gross annual income forms the foundation of your borrowing capacity
Existing Debts: Monthly obligations reduce the amount available for housing payments
Down Payment: Larger down payments increase purchasing power and reduce monthly costs
Interest Rates: Current market rates directly affect monthly payments and total borrowing capacity
Property Taxes: Vary significantly by location and impact overall housing costs
Debt-to-Income Ratio: Lenders' primary metric for determining loan eligibility

Practical Use Cases

First-Time Home Buyer Planning: Determine your realistic price range before starting your search, accounting for your specific income, student loan debt, and savings.

Relocation Budgeting: Calculate how much house you can afford in a new city with different property tax rates, insurance costs, and potentially different income levels.

Upsizing or Downsizing Analysis: Evaluate whether you can afford a more expensive home based on equity from your current property, changed income, or reduced expenses.

Debt Payoff Strategy Testing: Analyze how paying off student loans, car loans, or credit card debt affects your home purchasing power.

Interest Rate Impact Assessment: Understand how changing interest rates affect your budget in volatile markets.

Frequently Asked Questions

Should I use my gross or net income for affordability calculations?

Lenders use gross income (before taxes) for qualification. However, for personal budgeting, consider your net income after taxes, retirement contributions, and healthcare.

How do property taxes vary, and how can I get accurate estimates?

Property taxes vary by county, city, and sometimes neighborhood. Check your county assessor's website for rates. New constructions often have supplemental taxes.

What if I have irregular income (commission, bonuses, self-employment)?

Lenders typically average your last two years of income. For the calculator, use a conservative average of your monthly income over the past 24 months.

How much should I budget for maintenance and repairs?

Budget 1-2% of your home's value annually for maintenance. A $300,000 home needs $3,000-$6,000 per year. This isn't included in the calculator's monthly payment.

Can I include expected rental income from a basement apartment?

Lenders may include rental income if you have a signed lease or proven rental history (usually two years). Only include rental income you can reliably document.

How do HOA fees affect my affordability?

HOA fees are included in your debt-to-income ratio. If considering a condo or community with fees, add them to your monthly debts in the calculator.