Mortgage Affordability Calculator
Determine your home buying budget based on the "28/36 Rule" used by lenders.
30 Years Fixed
20 Years Fixed
15 Years Fixed
10 Years Fixed
Conservative (36%)
Standard (43%)
Aggressive (45%)
Estimated Max Home Price:
Estimated Monthly Payment:
Estimated Loan Amount:
Estimated Loan Amount:
How Much House Can I Afford?
Before you start browsing listings, it is vital to understand your financial boundaries. Most lenders use specific ratios to determine how much they are willing to lend you. The primary metric is the Debt-to-Income (DTI) ratio. This ratio compares your total monthly debt obligations against your gross monthly income.
The 28/36 Rule Explained
Financial experts often recommend the 28/36 rule:
- Front-End Ratio (28%): Your mortgage payment (including taxes and insurance) should not exceed 28% of your gross monthly income.
- Back-End Ratio (36%): Your total debt payments (mortgage plus car loans, student loans, and credit cards) should not exceed 36% of your gross monthly income.
While some modern loan programs allow for DTIs as high as 43% to 45%, staying closer to 36% ensures you have a safety net for maintenance and unexpected costs.
Realistic Example:
If you earn $100,000 per year, your gross monthly income is $8,333. At a 36% DTI, your total debt limit is $3,000/month. If you have a $500 car payment, your maximum mortgage payment can be $2,500/month. With a 6.5% interest rate on a 30-year term and a $50,000 down payment, you could afford a home priced at approximately $445,000.
If you earn $100,000 per year, your gross monthly income is $8,333. At a 36% DTI, your total debt limit is $3,000/month. If you have a $500 car payment, your maximum mortgage payment can be $2,500/month. With a 6.5% interest rate on a 30-year term and a $50,000 down payment, you could afford a home priced at approximately $445,000.
Factors That Affect Your Budget
1. Interest Rates: Even a 1% increase in interest rates can reduce your buying power by tens of thousands of dollars.
2. Down Payment: The more you put down, the lower your monthly loan payment will be, and the higher the home price you can afford.
3. Credit Score: Higher credit scores unlock lower interest rates, directly impacting your monthly payment capacity.
4. Property Taxes and Insurance: These vary significantly by location. Our calculator estimates these costs, but you should check local rates for accuracy.