House Affordability Calculator
Estimate the maximum home price you can afford based on your gross income, monthly debts, available down payment, mortgage rate, and a lender-standard debt-to-income ratio. Use it before house hunting to set a realistic price range.
Last updated: September 2026
Formula below · 2 sources (CFPB, Wikipedia) · Updated Sep 2026
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About this calculator
Lenders commonly apply the 28/36 rule: housing costs may take up to 28% of gross monthly income, and housing plus all other debt payments up to 36%. This calculator takes the smaller of the two limits as your maximum monthly housing payment, min(28% × income, 36% × income − debts), and requires it to cover principal and interest on a 30-year fixed loan plus property tax. Solving for the price: Max Price = payment / ((1 − down%) × f + propertyTaxRate / 12), where f = r / (1 − (1 + r)^−360) is the monthly payment per dollar borrowed and r is the monthly rate. Homeowners insurance, PMI and HOA dues are not included, so subtract their monthly cost from the budget for a tighter estimate. Many lenders accept back-end ratios of 43–50%, so a lender may approve more than this conservative figure.
How to use
Assume gross monthly income of $7,000, $300 of monthly debts, 10% down, a 7% rate and a 1.2% property-tax rate. Step 1: 28% × $7,000 = $1,960; 36% × $7,000 − $300 = $2,220; the budget is the smaller, $1,960. Step 2: r = 0.07 / 12 ≈ 0.005833 and f ≈ 0.006653. Step 3: Monthly cost per dollar of price = 0.90 × 0.006653 + 0.012 / 12 = 0.005988 + 0.001 = 0.006988. Step 4: Max price = $1,960 / 0.006988 ≈ $280,492. With the defaults ($7,500 income, $800 debts, 20% down, 6.8%, 1.2% tax) the budget is $1,900 and the maximum price about $305,692.
Frequently asked questions
What debt-to-income ratio do lenders typically require to approve a mortgage?
Most conventional mortgage lenders prefer a back-end DTI (all monthly debts divided by gross monthly income) of 43% or below (the CFPB's former qualified-mortgage cap, replaced by a price-based test in 2021). Some lenders using automated underwriting may approve DTIs up to 50% for borrowers with strong credit scores and significant cash reserves. FHA loans formally allow up to 57% DTI in certain cases. A lower DTI not only improves approval odds but also often qualifies you for better interest rates, reducing the total cost of the loan over its lifetime.
How does the size of my down payment affect how much house I can afford?
Your down payment increases affordability in two ways. First, it directly reduces the loan amount needed, lowering your required monthly payment. Second, putting down 20% or more eliminates private mortgage insurance (PMI), which typically costs 0.5–1.5% of the loan amount annually and would otherwise count against your DTI. A larger down payment can also secure a lower interest rate, further reducing monthly costs. However, depleting all savings for a large down payment can be risky — most advisors recommend keeping 3–6 months of expenses in an emergency fund after closing.
Why does the calculator use a 30-year term by default for the affordability estimate?
A 30-year fixed mortgage produces the lowest possible monthly payment for a given loan amount, which maximizes the loan principal — and therefore the home price — you can afford under a DTI constraint. Lenders also commonly underwrite affordability using 30-year terms as the standard scenario. In practice, you can choose a 15-year or 20-year term, which will result in a lower maximum loan amount but far less total interest paid over the life of the loan. The calculator gives you a ceiling; your personal comfort with monthly payments and long-term interest costs should guide your actual loan term decision.