Home Affordability Calculator

Start with your annual gross income — the number on your offer letter or the total on line 9 of your most recent tax return, before any deductions. If you're buying with a partner, combine both incomes.

Next, enter your monthly debts. Add up every recurring obligation that shows on your credit report: car payments, student loan minimums, credit card minimums, personal loans, and child support. Don't include utilities, groceries, or subscriptions — lenders only count debts that appear on your credit file.

Your down payment is the cash you'll bring to closing. Check your savings, investment accounts, and any gift funds from family. A larger down payment lowers your loan amount and can eliminate PMI if you reach 20% of the home price.

The interest rate defaults to 6.75%, close to current 30-year fixed averages. You can adjust this based on recent quotes or your credit profile — borrowers with scores above 760 typically qualify for rates 0.25–0.5% below the average.

Choose a loan term of 30 or 15 years. A 30-year term keeps monthly payments lower, while a 15-year term builds equity faster and costs significantly less in total interest. For the property tax rate, the default is 1.2% of home value annually — but this varies dramatically by location. Look up your target county's rate on the assessor's website. Finally, the monthly insurance estimate covers homeowner's insurance. $150/month is typical for a mid-range home, but coastal or disaster-prone areas can run $250+.

The target DTI ratio controls the “Maximum” range in your results. The default 36% is the standard guideline; you can raise it to 43% to see the absolute ceiling most lenders will approve, but borrowing at that level leaves very little room for unexpected expenses.

Lenders use two DTI ratios to decide how much mortgage you can handle. The front-end ratio (also called the housing ratio) divides your total monthly housing costs — principal, interest, property taxes, insurance, and PMI — by your gross monthly income. Most lenders want this at or below 28%. On a $100,000 salary, that means your total housing payment should stay under $2,333 per month.

The back-end ratio adds all of your other monthly debts on top of housing. If you earn $8,333/month gross and have a $400 car payment plus $200 in student loan minimums, the lender adds those $600 to your housing costs before dividing by income. The standard guideline caps this at 36%, though many conventional and FHA loans allow up to 43% for well-qualified borrowers. Beyond 43%, you're outside Qualified Mortgage rules, and most lenders won't approve the loan at all.

This is the logic behind the 28/36 rule you'll hear mortgage advisors reference. It means: spend no more than 28% of gross income on housing, and no more than 36% on all debts combined. The rule isn't law — it's a risk threshold. Borrowers who exceed it default at higher rates, which is why lenders enforce it.

Our calculator shows two ranges for exactly this reason. The “Comfortable” range is calculated at the 28% front-end DTI — a budget that leaves breathing room for savings, maintenance, and life. The “Maximum” range uses your chosen back-end DTI target minus existing debts. The gap between those two numbers is your decision zone: you can borrow up to the maximum, but the comfortable number is where most financial planners recommend you stay.

When your DTI creeps above 36%, lenders compensate for the added risk with stricter requirements: higher credit score minimums, larger cash reserves, and sometimes a higher interest rate. Above 43%, you're essentially locked out of the conventional mortgage market. If the calculator shows a yellow or red warning, that's your signal to either increase your down payment, pay down debts, or lower your price target.

Income is the biggest lever. The math is nearly linear: a household earning $150,000 can afford roughly 50% more home than one earning $100,000, all else equal. If you're early in your career and expecting a raise in the next year, it may be worth waiting — a $10,000 salary increase translates to roughly $25,000–$35,000 in additional buying power.

Existing debts drag down affordability hard. Every $500/month in debt payments reduces your maximum home price by approximately $70,000–$80,000. That $450 car payment you're carrying? It's costing you more than the car itself in lost buying power. Paying off a credit card with a $200 minimum before applying for a mortgage can add $25,000+ to your budget.

Down payment works two ways. The obvious effect: putting down $80,000 instead of $40,000 means borrowing $40,000 less. The less obvious effect: if that extra cash pushes you past the 20% down payment threshold, you eliminate PMI entirely — saving $100–$250 per month that can go toward a higher purchase price instead. On a $350,000 home, the PMI cutoff is $70,000 down.

Interest rates move the needle more than most buyers expect. A 1% rate increase on a $300,000 loan adds roughly $180/month to your payment. Working backward, that translates to $25,000–$40,000 less home you can afford at the same monthly budget. This is why rate shopping matters: even a 0.25% difference across lenders compounds into thousands over the life of the loan.

Property taxes vary wildly by state and county. Texas averages 1.8% of home value annually, while Hawaii sits at 0.29%. On a $400,000 home, that's the difference between $600/month and $97/month in taxes alone. The same income buys a much more expensive home in a low-tax state. If you're flexible on location, this one factor can shift your budget by $100,000+.

Once you have a price range in mind, the next move is getting a genuine pre-approval letter from a lender. This is different from pre-qualification, which is just an estimate. Pre-approval means the lender has pulled your credit, verified your income and assets, and committed to a specific loan amount. Sellers take pre-approved offers far more seriously — in competitive markets, it's often required just to get your offer considered.

Compare at least three lenders. Rates and fees vary more than you'd expect. A recent Freddie Mac study found that borrowers who got just one additional quote saved an average of $1,500 over the life of their loan, and those who got five quotes saved an average of $3,000. Look at banks, credit unions, and online lenders. Focus on the APR (which includes fees), not just the rate.

Before you apply anywhere, check your credit report at annualcreditreport.com. Dispute any errors — even small ones can drop your score by 20–40 points. If your score is below 740, consider spending a few months paying down credit card balances below 30% utilization before applying. Each 20-point improvement in your score can mean a 0.125–0.25% lower rate.

Finally, build in a buffer. Just because you qualify for a $450,000 home doesn't mean you should buy one. The calculator's “Comfortable” range exists for a reason: homes need repairs, property taxes increase, and life has a way of creating unexpected expenses. Most financial advisors suggest targeting a monthly housing payment that's 25–28% of gross income, leaving headroom for savings and flexibility.

Ready to learn more? Read our complete mortgage guide for a deep dive into the application process, or check out the first-time buyer guide if this is your first home purchase.