About this House Affordability
Buying a home is the biggest purchase most people will ever make. Before you start touring open houses, use this calculator to determine a realistic budget. It uses the same 'Debt-to-Income' ratios that lenders use to qualify you for a mortgage.
Who this calculator is for
- First-time buyers trying to set a realistic shopping budget before talking to lenders.
- Households balancing income, debts, and savings to estimate how much home is practical.
- Borrowers who want a conservative benchmark based on common lender ratios.
When to use it
- Use this calculator before browsing listings so you can narrow your target price range.
- Run scenarios after paying off debt or increasing income to see how your buying power changes.
- Combine this with the mortgage and down payment tools when you want to connect price range to monthly payment.
How to use this calculator
- Enter your Annual Income (before taxes).
- Input your Monthly Debts (car payments, student loans, credit cards).
- Enter your available Down Payment cash.
- Adjust the Interest Rate and Loan Term to see how buying power changes.
Key assumptions
- The estimate uses the 28/36 rule as a conservative lender-style guideline.
- Property tax and insurance are simplified into a monthly estimate instead of location-specific calculations.
- Approval outcomes still depend on credit, reserves, underwriting, and lender program rules.
Accuracy and testing
Review formula sources, default test cases, assumptions, unit handling, rounding rules, and changelog for this calculator.
How this calculator works
Inputs explained
Annual Income
Your total gross household income before taxes. Include salary, bonuses, and other reliable income sources.
Monthly Debts
The sum of your minimum monthly payments for credit cards, auto loans, student loans, and other personal debts.
Down Payment
The amount of cash you have saved to pay upfront. A larger down payment reduces the loan amount and increases your price range.
Tax & Ins
Estimated monthly cost for Property Taxes and Homeowners Insurance. This counts toward your housing liability.
Understanding your results
Example scenarios
Standard Scenario
Income $80k, Debts $500/mo, Down Payment $40k. The 28% rule allows ~$1,866 for housing. The 36% rule allows ~$2,400 total debt ($1,900 for housing). The lower limit ($1,866) determines affordability.
High Debt Scenario
If debts increase to $1,000/mo, the 36% rule limit drops to $1,400 for housing. This significantly reduces buying power even if income stays the same.
Key Features
- Uses Industry Standard 28/36 Rule
- Accounts for Property Tax & Insurance
- Calculates Max Loan & Home Price
Things to Keep in Mind
This tool provides an estimate. Actual loan approval depends on your credit score, employment history, and current interest rates.
Tips & Best Practices
- Pay off consumer debt (credit cards, car loans) before applying for a mortgage to drastically increase your affordability.
- Don't spend the max amount the bank approves. Leave room in your budget for maintenance, repairs, and furnishings.
- Consider a 15-year mortgage for lower interest rates, though this will reduce the maximum home price you can afford monthly.
Glossary of Terms
- PITI
- Principal, Interest, Taxes, and Insurance. The components of a monthly mortgage payment.
- DTI
- Debt-to-Income Ratio. The percentage of your gross monthly income that goes to paying debts.
- Front-End Ratio
- The percentage of income that goes toward housing costs.