🏡 House Affordability Calculator
Estimate how much home you can afford based on your income, existing debts, down payment, and loan terms.
Your Finances
What You Can Afford
This estimate assumes your total housing payment (principal, interest, taxes, and insurance) plus existing debts should not exceed your maximum DTI. Actual lender approval depends on credit score, other underwriting factors, and loan program.
How the House Affordability Calculator Works
This calculator finds the maximum monthly housing payment your income and debts allow under your target DTI ratio, subtracts estimated taxes and insurance, then works backward to find the largest loan — and home price — that payment supports.
Formula
Monthly Tax = Home Price × Tax Rate% / 12; Monthly Insurance = Annual Insurance / 12
Max P&I Payment = Max Housing Payment − Monthly Tax − Monthly Insurance
Max Loan = PMT × [1 − (1 + r)⁻ⁿ] / r
Max Home Price = Max Loan + Down Payment
Worked Example
For a $90,000 annual income, $400 in monthly debts, a $40,000 down payment, a 6.5% rate over 30 years, 1.2% property tax, and $1,500 annual insurance at a 36% max DTI: the max monthly housing payment is ($90,000 ÷ 12 × 36%) − $400 = $2,300.00. After backing out estimated monthly tax ($331.64) and insurance ($125.00), $1,843.36 remains for principal and interest, which supports a maximum loan of $291,639.45 — for an affordable home price of $331,639.45 once the down payment is added back in.
Frequently Asked Questions
How is affordability calculated?
Lenders typically cap your total monthly debt (including the new mortgage payment) at a percentage of gross income — commonly 36% for conventional loans. This calculator works backward from that limit to estimate a loan amount and home price.
Does this include property tax and insurance?
Yes. The calculator estimates monthly property tax from your entered tax rate and home price, and monthly insurance from your entered annual premium, both counted against your maximum housing payment.
Why is my estimate different from what a lender offers?
Lenders also weigh credit score, employment history, cash reserves, and specific loan program rules (FHA, VA, conventional) that this simplified calculator doesn't account for.
How do I use this to decide between renting and buying?
Compare the calculator's estimated monthly principal, interest, tax, and insurance payment (the "Est. Monthly Principal & Interest" plus tax and insurance figures above) against your current or available rent for a similar home. A lower or similar monthly cost doesn't automatically make buying cheaper overall — it excludes one-time closing costs, ongoing maintenance, and how long you plan to stay before the math favors ownership.