Home Affordability Calculator
Find out how much house you can realistically afford based on your income and debts.
30 Years Fixed
20 Years Fixed
15 Years Fixed
10 Years Fixed
36% (Conservative)
43% (Standard)
50% (Aggressive)
Maximum Purchase Price: $0
Estimated Monthly Payment (P&I):
$0
Total Loan Amount:
$0
Monthly Gross Income:
$0
How Is Home Affordability Calculated?
Lenders primarily use two metrics: your Debt-to-Income (DTI) ratio and your down payment. The DTI ratio is the percentage of your gross monthly income that goes toward paying debts. Most conventional lenders prefer a DTI ratio of 36% to 43%, though some programs allow up to 50%.
Our calculator uses the "Front-End" and "Back-End" logic. It calculates the maximum monthly mortgage payment you can afford by taking your monthly gross income, multiplying it by your target DTI, and then subtracting your existing monthly debt obligations (like car loans or student debt).
Realistic Example
Imagine a couple with a combined Annual Income of $100,000. Their monthly gross income is approximately $8,333. If they aim for a 36% DTI ratio, their total monthly debt ceiling is $3,000. If they already pay $500/month for a car loan, they have $2,500 left for a mortgage payment. With a 6.5% interest rate and a $60,000 down payment, they could potentially afford a home priced around $455,000.
Key Factors Impacting Your Budget
- Interest Rates: Even a 1% shift in interest rates can change your purchasing power by tens of thousands of dollars.
- Down Payment: A larger down payment reduces your loan-to-value ratio, often securing better rates and eliminating Private Mortgage Insurance (PMI).
- Credit Score: Higher scores unlock lower interest rates, which directly increases the "purchase price" you can afford for the same monthly payment.