Home Affordability Calculator
Find out how much house you can afford based on your income, debts, down payment, and current interest rates.
How Home Affordability Is Calculated
This calculator determines the maximum home price you can afford using the 28% front-end DTI rule, which states that your total monthly housing costs should not exceed 28% of your gross monthly income. Housing costs include your mortgage principal and interest, property taxes, and homeowner's insurance.
The Math Behind the Estimate
First, the calculator finds your maximum monthly housing budget (28% of gross monthly income). It then subtracts estimated property taxes and insurance to determine how much can go toward the mortgage payment. Using the mortgage payment formula with your interest rate and loan term, it works backward to find the maximum loan amount, then adds your down payment to get the home price.
Why Conservative Estimates Matter
Just because you can qualify for a certain amount doesn't mean you should borrow that much. The conservative estimate uses 25% of income instead of 28%, leaving more room for maintenance costs, savings, and lifestyle expenses. Many homeowners who buy at their maximum end up "house poor" — able to make payments but struggling with everything else.
Factors That Affect Affordability
Interest rates have a massive impact on affordability. A 1% rate increase on a $400,000 loan adds roughly $250 per month. Property tax rates vary widely by location — from under 0.5% in Hawaii to over 2% in New Jersey and Illinois. HOA fees, PMI (if your down payment is under 20%), and insurance costs in disaster-prone areas can further reduce how much home you can realistically afford.
Frequently Asked Questions
What is the 28/36 rule for home buying?
The 28/36 rule is a guideline used by lenders. It states that your housing costs (mortgage, taxes, insurance) should not exceed 28% of your gross monthly income (front-end ratio), and your total debt payments should not exceed 36% of gross income (back-end ratio). This calculator uses the 28% front-end rule.
How much house can I afford on a $100,000 salary?
Using the 28% rule with a $100,000 salary, your max monthly housing payment would be about $2,333. With a 20% down payment, 7% interest rate, and typical taxes/insurance, you could afford roughly a $350,000-$400,000 home. Your actual number depends on debts, down payment, rates, and local property taxes.
Does the down payment affect how much house I can afford?
Yes, significantly. A larger down payment reduces your loan amount, which means lower monthly payments and potentially eliminating private mortgage insurance (PMI). With 20% down, you avoid PMI entirely. A larger down payment can also help you qualify for a higher purchase price within the same monthly budget.
What costs beyond the mortgage should I budget for?
Budget for property taxes (0.5-2.5% of home value annually), homeowner's insurance ($1,000-$3,000/year), PMI if under 20% down (0.5-1% of loan annually), HOA fees, maintenance (1-2% of home value per year), and utilities. These can add $500-$1,500+ per month beyond your mortgage payment.