Home Affordability Calculator
How much house you can afford is less about the price lenders will approve and more about the monthly payment you can carry. Lenders commonly apply two debt-to-income (DTI) limits: housing costs shouldn’t exceed about 28% of gross monthly income, and total debts including housing shouldn’t exceed about 36%. This calculator applies those ratios, subtracts your other debts, then solves backwards for the highest price whose payment — principal, interest, property tax, insurance, any HOA fees and mortgage insurance if you put down under 20% — fits inside the budget.
How to use the home affordability calculator
- Enter your gross (pre-tax) annual income and the monthly payments you already have on other debts.
- Enter the down payment you have saved, the rate you expect to get and the loan term.
- Adjust the property tax rate, insurance and HOA for the area you are looking in; these move the answer more than most people expect.
- Pick a ratio profile — standard is a good planning default, conservative leaves more breathing room, and the looser profile reflects some government-backed loans.
Formula
Housing budget = the lower of (front-end % × gross monthly income) and (back-end % × gross monthly income − other monthly debts). Monthly housing cost for a price P with down payment D is k × (P − D) + tax% × P ÷ 12 + insurance ÷ 12 + HOA (+ mortgage insurance of about 0.5% a year on the loan when D is under 20% of P), where k is the payment per dollar borrowed, i ÷ (1 − (1 + i)−n). The calculator solves that equation for the largest P that fits the budget.
Worked examples
$100,000 income, $60,000 down
With $100,000 income, $400 of monthly debts, a $60,000 down payment, a 6.5% 30-year rate, 1.1% property tax and $1,500 insurance, the housing budget is $2,333 a month (28% of $8,333; the 36% rule allows $2,600). That supports a home of about $341,333.88, with a total monthly payment of $2,333.33 and a down payment of 17.6% of the price.
A small down payment
With only $10,000 down on $90,000 income, $300 of debts, $100 HOA and the same rate, the affordable price is about $253,771.89, and the budget includes $101.57 a month in mortgage insurance because the down payment is under 20%.
Debts that block the loan
If monthly debts are large enough that 36% of income minus debts is zero or negative, there is no housing budget left under that profile — the calculator says so rather than showing a misleading price.
Behind the 28/36 rule
Front-end and back-end ratios
The front-end ratio is housing costs ÷ gross monthly income; the back-end ratio adds all other monthly debts. Lenders use both. This calculator applies whichever limit is tighter for you, which is why paying off a car loan can raise what you can afford by more than the loan’s payment suggests.
What counts as housing cost
| Component | Included here |
|---|---|
| Principal and interest | Yes |
| Property tax | Yes — rate × price ÷ 12 |
| Home insurance | Yes |
| HOA / service charge | Yes, if entered |
| Mortgage insurance | Yes, estimated, if the down payment is under 20% |
| Maintenance and repairs | No — budget about 1% of the home’s value a year yourself |
How rate affects the price you can afford
For the same budget, a lower rate buys a much larger loan. With $100,000 income and $60,000 down, the same budget at 5.5% supports about $367,126.62 compared with $318,643.79 at 7.5% — a gap driven entirely by the rate. Walk through the method in how to calculate how much house you can afford.
Practice problems
Try these yourself first, then check your answer. The answers come from the calculator above.
- Income $85,000, $250 of monthly debts, $40,000 down, 6.75% rate, 30 years, 1.2% property tax, $1,400 insurance. What price is affordable?
Show answer
Estimated home price you can afford: $271,146.16 · Estimated monthly housing payment: $1,983.33
Common mistakes to avoid
- Treating the lender’s maximum approval as what you should spend. Approval ratios ignore childcare, commuting, savings goals and the cost of repairs.
- Using only principal and interest. Property tax, insurance and HOA fees can add several hundred dollars a month.
- Forgetting closing costs and a moving/repairs fund on top of the down payment.
- Using net (take-home) income. Lender ratios use gross income before tax.
- Ignoring that rates move. A one-point rise cuts affordable price noticeably — try a few rates.
Frequently asked questions
How much house can I afford on a $100,000 salary?
It depends on debts, down payment, rate and local taxes. Using the standard 28/36 ratios the answer is shown above with your own inputs; the example on this page walks through one case.
What is the 28/36 rule?
A traditional guideline: housing costs up to 28% of gross monthly income, and total monthly debt payments (housing plus everything else) up to 36%. The calculator uses whichever limit is lower for you.
Does a bigger down payment raise what I can afford?
Yes, in two ways: it reduces the loan you need and, at 20% or more of the price, removes mortgage insurance. The calculator handles both.
Why does the calculator include mortgage insurance?
Lenders usually require private mortgage insurance (or an equivalent) when you put down less than 20%. The calculator estimates it at about 0.5% a year on the loan — your actual cost varies by lender and credit.
Are property taxes the same everywhere?
No. Effective rates vary widely between states, counties and countries. Replace the default 1.1% with the figure for the area you are considering.
Is this financial advice?
No. It is an educational estimate. A lender’s pre-approval and a qualified adviser are the sources for real numbers.
Sources and further reading
- Federal Reserve Board — interest-rate and monetary-policy information
- IRS — Topic no. 505, Interest expense (includes home mortgage interest)
By Thomas M, Registered Investment Adviser (South Carolina), who launched his own financial advisory firm in 2010. Last reviewed September 26, 2026. Found a mistake? Tell us; see our editorial policy.