Home Affordability Calculator
Determine the maximum home price you can afford based on income and debts
How to Use This Calculator
- Enter your pre-tax income in Gross Annual Household Income ($).
- Specify your total upfront cash available in Down Payment Saved ($).
- Add all monthly recurring debt obligations in Monthly Debt Payments ($) (e.g., student loans, credit card minimums, auto loans).
- Set expected mortgage parameters including rate, term, and combined taxes/insurance estimate.
- Click “Calculate Affordability” to reveal your estimated maximum purchase budget and maximum safe monthly housing payment.
The Formula Used
Lenders use Debt-to-Income (DTI) thresholds to calculate maximum qualifying monthly housing payments ($P_{max}$):
Frequently Asked Questions (FAQ)
What is the 28/36 rule for home affordability?
The 28/36 rule is a standard underwriting guideline: your total housing payment should not exceed 28% of your gross monthly income, and total debt payments (housing + existing debts) should not exceed 36%.
Does this estimate include property taxes and home insurance?
Yes. The calculation allocates part of your maximum payment toward property taxes and hazard insurance, offering a realistic view of overall housing expense capacity.
How does my down payment impact total budget?
Your down payment adds dollar-for-dollar to the max loan amount your monthly income supports, lowering overall loan-to-value (LTV) and reducing monthly principal and interest charges.
What about Private Mortgage Insurance (PMI)?
If your down payment is under 20% of the calculated purchase price, lenders typically add PMI fees (0.5%–1.5% annually), slightly reducing your total home purchase limit.