Home Affordability Calculator
Discover how much home you can afford based on your income, debts, and down payment.
Your Financial Details
Monthly: $6,250
Car loans, credit cards, student loans, etc.
Understanding Affordability
- • Enter your gross (before tax) annual income
- • Include all monthly debt payments
- • Specify how much you've saved for down payment
- • The calculator uses 28/36 debt-to-income ratios
Note: This calculator provides estimates only. Actual loan approval depends on credit score, employment history, assets, and lender requirements.
You Can Afford
$270,000
Monthly Payment
$1,759
Down Payment
$50,000
Debt-to-Income Analysis
Recommended: 28% or less
Recommended: 36% or less
How This Calculator Works
- • Uses standard 28/36 debt-to-income ratios (customizable)
- • Includes property taxes at 1.20% of home value
- • Estimates homeowners insurance at 0.35% of home value
- • Adds PMI if down payment is less than 20%
- • Factors in all existing monthly debt obligations
What Affects Your Affordability?
Your Income
Lenders typically use your gross (before-tax) monthly income. Include all sources: salary, bonuses, commissions, and other regular income.
Existing Debts
Include all monthly payments: car loans, student loans, credit cards, personal loans. Lenders want to see your total debt stays under 36% of income.
Down Payment
A larger down payment means a smaller loan and lower monthly payments. 20% down avoids PMI (private mortgage insurance).
Interest Rate
Your credit score, loan type, and down payment affect your rate. Even 0.5% can significantly impact affordability.
Understanding Debt-to-Income Ratios
Front-End Ratio (28%)
Housing expenses (mortgage payment, taxes, insurance, HOA) should not exceed 28% of your gross monthly income. This is also called the housing expense ratio.
Back-End Ratio (36%)
Total monthly debt (housing + all other debts) should not exceed 36% of your gross monthly income. This includes credit cards, car loans, and student loans.
Example: If you earn $6,000/month, your maximum housing payment should be $1,680 (28%) and your total debt payments should not exceed $2,160 (36%).
Tips to Increase Your Buying Power
Pay down existing debts - Reducing monthly obligations increases your available income for housing
Improve your credit score - Better credit = lower interest rates = more affordable homes
Save a larger down payment - 20% down eliminates PMI and reduces monthly payments
Increase your income - Ask for a raise, take on side work, or include co-borrower income
Consider different loan terms - 15-year mortgages have higher payments but lower rates