How Much House Can I Afford?

Calculate your affordable home price based on income and budget

🏠 House Affordability Calculator

Calculate your affordable home price based on income and budget

Latest Mortgage Rates: 30 Years: 6.286% | 15 Years: 5.413% | 10 Years: 5.25%

💰 Income-Based Calculator

📊 Budget-Based Calculator

What is a House Affordability Calculator?

A house affordability calculator is a powerful financial tool that helps you determine how much home you can realistically afford based on your income, debts, down payment, and other financial factors. It takes into account various elements such as your annual household income, monthly debt obligations, desired down payment, interest rates, property taxes, insurance, and HOA fees to calculate the maximum home price you can comfortably purchase.

This calculator provides two approaches: an income-based method that uses debt-to-income (DTI) ratios to determine affordability, and a budget-based method that starts with your desired monthly payment. Both methods help you understand not just the home price, but also the complete picture of monthly costs including principal, interest, taxes, insurance, and other fees.

Understanding your home affordability is crucial for making informed decisions about one of the largest purchases you'll ever make. It helps you avoid overextending yourself financially, plan for down payments and closing costs, compare different loan options, and streamline your home search by focusing on properties within your realistic price range.

How to Use This Calculator

Choose between Income-Based or Budget-Based calculation method depending on your planning approach
For Income-Based: Enter your annual household income, monthly debts, and select your preferred DTI ratio (conventional, FHA, VA, or custom percentage)
For Budget-Based: Enter your desired monthly budget and choose whether to include taxes and fees in that budget
Input your down payment (as percentage or dollar amount), loan term, and interest rate. You can click the latest rates above to auto-fill current market rates
Enter additional costs like property tax, HOA fees, insurance, and maintenance (these can be entered as percentages of home price or fixed dollar amounts)
Click 'Calculate Affordability' to see your maximum affordable home price, monthly payment breakdown, loan amount, and DTI ratios

Latest Insights on Home Affordability

Understanding Affordability Calculations

A house affordability calculator estimates the maximum home price, monthly mortgage payment, and loan amount a buyer can realistically afford based on inputs like income, debts, down payment, credit score, and local factors such as taxes and insurance. These tools provide a comprehensive view of your purchasing power and help set realistic expectations before you start house hunting.

Key Benefits for Homebuyers

Using an affordability calculator is essential for setting a realistic budget, avoiding financial overextension, planning down payments and other costs like PMI and closing fees, comparing different loan options, and streamlining the home search process. It helps you understand the full financial commitment beyond just the purchase price, including ongoing monthly expenses and long-term costs.

Current DTI Guidelines

Latest guidelines emphasize using debt-to-income (DTI) ratios with housing costs at or below 28% of gross income and total debt at or below 36%. Most calculators start at 36% DTI and adjust for different affordability levels (affordable, stretching, aggressive). Factors like credit score significantly impact available rates and options, while larger down payments enable higher purchase prices or better loan terms.

Best Practices for Accurate Results

For the most accurate affordability estimate, enter your complete annual pre-tax income (combined for co-borrowers), all monthly debt obligations, available cash for down payment and closing costs, and location-specific costs. Use the calculator early in your home-buying process for prequalification insights, but remember to factor in emergency savings, retirement contributions, and other financial goals. Note that calculator results are estimates and not pre-approval for a mortgage.

Understanding Home Affordability Details

Debt-to-Income Ratios Explained

The debt-to-income (DTI) ratio is a critical factor in determining how much house you can afford. There are two types of DTI ratios:

Front-End DTI (Housing Ratio): This is the percentage of your gross monthly income that goes toward housing costs (mortgage payment, property taxes, insurance, HOA fees). Most lenders prefer this to be 28% or less for conventional loans.
Back-End DTI (Total Debt Ratio): This includes all monthly debt obligations (housing costs plus car loans, student loans, credit cards, etc.). Conventional loans typically require this to be 36% or less, though FHA loans may allow up to 43%.
Different loan types have different DTI requirements: Conventional loans use the 28/36 rule, FHA loans allow 31% front-end and 43% back-end, and VA loans typically allow up to 41% total DTI.

Down Payment Considerations

Your down payment significantly affects your home affordability. A larger down payment (20% or more) eliminates the need for private mortgage insurance (PMI), reduces your loan amount and monthly payments, may qualify you for better interest rates, and demonstrates financial stability to lenders. However, many loan programs allow smaller down payments: FHA loans require as little as 3.5%, VA loans may require 0% down for eligible veterans, and some conventional loans accept down payments as low as 3%.

Additional Costs to Consider

Beyond the mortgage payment, homeownership includes several ongoing costs:

Property Taxes: Typically 0.5% to 2.5% of home value annually, varying by location
Homeowners Insurance: Usually 0.3% to 1.5% of home value per year
HOA Fees: If applicable, can range from $100 to $700+ monthly
Maintenance and Repairs: Budget 1% to 2% of home value annually
Utilities: Electricity, gas, water, internet, and other services

Impact of Credit Score

Your credit score significantly affects your mortgage rate and affordability. Higher credit scores (740+) typically qualify for the best rates, potentially saving tens of thousands of dollars over the life of the loan. Lower scores may result in higher rates or require larger down payments. Before applying for a mortgage, check your credit report for errors, pay down existing debts to improve your DTI ratio, and avoid opening new credit accounts.

Frequently Asked Questions

How accurate is this affordability calculator?

This calculator provides a reliable estimate based on standard lending guidelines and the information you provide. However, actual affordability depends on many factors including your complete financial profile, credit score, employment history, and lender-specific requirements. Use this as a starting point, but consult with a mortgage lender for a precise pre-approval amount.

What's the difference between pre-qualification and pre-approval?

Pre-qualification is an informal estimate of how much you might be able to borrow based on self-reported financial information (similar to what this calculator provides). Pre-approval is a formal process where a lender verifies your financial information, checks your credit, and commits to lending you a specific amount. Pre-approval carries more weight when making an offer on a home.

Should I use the income-based or budget-based calculator?

Use the income-based calculator if you want to see the maximum you can afford based on lending guidelines and DTI ratios. Use the budget-based calculator if you have a specific monthly payment amount in mind and want to see what home price that supports. Many buyers use both methods to understand their options from different perspectives.

How much should I put down on a house?

While 20% down is ideal to avoid PMI and secure better rates, it's not always necessary. FHA loans require as little as 3.5% down, and some conventional loans accept 3%. Consider your savings, emergency fund needs, and whether you'd benefit from investing extra cash elsewhere. A larger down payment reduces monthly costs but shouldn't deplete your emergency savings.

What if I have student loans or other debt?

All monthly debt obligations affect your affordability through the back-end DTI ratio. Include minimum payments for student loans, car loans, credit cards, and any other recurring debts. Paying down high-interest debt before buying a home can improve your DTI ratio and potentially qualify you for a larger loan amount or better interest rate.

How do interest rates affect affordability?

Interest rates significantly impact affordability. Even a 0.5% difference in rate can change your monthly payment by hundreds of dollars and affect the total home price you can afford. Higher rates mean lower affordability, while lower rates increase purchasing power. Monitor current rates and consider rate-lock options when you find favorable terms.

Should I include maintenance costs in my budget?

Absolutely. Many first-time buyers underestimate ongoing maintenance and repair costs. A good rule of thumb is to budget 1-2% of your home's value annually for maintenance. Older homes may require more, while newer homes or condos (with HOA fees covering some maintenance) may require less. Factor these costs into your overall housing budget to avoid financial stress.