Enter your income, monthly debts, and down payment to instantly find out the maximum home price you can afford based on lender guidelines.

Free Home Affordability Calculator - How Much House Can You Afford?

How to Use This Home Affordability Calculator

Enter your annual gross income and your co-borrower's income if applicable. Then enter your current monthly debt payments — car payment, student loans, credit card minimums, and any other debt. Add your available down payment, expected interest rate, loan term, and estimated property tax rate and insurance. Hit calculate and instantly see three home price scenarios based on conservative, moderate, and maximum lender guidelines.

How Much House Can You Afford?

The answer depends on four key factors — your income, your existing debt, your down payment, and the current interest rate environment. Lenders use two main ratios to decide how much they will lend you.

The front-end ratio also called the housing ratio limits your total monthly housing payment — including principal, interest, property taxes, insurance, and HOA fees — to 28% of your gross monthly income. This is the conservative benchmark.

The back-end ratio also called the debt-to-income ratio or DTI includes all of your monthly debt payments including the new mortgage payment and compares the total to your gross monthly income. Most conventional lenders allow a maximum DTI of 43% though many prefer to see it at 36% or below.

This calculator shows you all three scenarios so you can see the range from conservative to maximum buying power.

The 28/36 Rule Explained

The 28/36 rule is the most widely used affordability guideline in mortgage lending. It states that your monthly housing costs should not exceed 28% of your gross monthly income and your total monthly debt payments should not exceed 36% of your gross monthly income.

On a $90,000 combined annual income that is $7,500 per month. The 28% rule limits your housing payment to $2,100 per month. The 36% rule limits your total debt including housing to $2,700 per month.

If you already have $500 per month in debt payments then the 36% rule leaves only $2,200 per month for housing — close to what the 28% rule allows in this example.

What Is Debt-to-Income Ratio and Why Does It Matter?

Your debt-to-income ratio is the percentage of your gross monthly income that goes toward debt payments. It is the single most important factor lenders look at when deciding how much to lend you — even more important than your credit score in many cases.

A DTI below 36% is considered good by most conventional lenders. Between 36% and 43% is acceptable but may limit your loan options. Above 43% most conventional lenders will not approve your loan though FHA loans allow DTIs up to 50% in some cases.

The fastest way to increase your home buying power is to pay down existing debt. Eliminating a $400 per month car payment can increase your maximum home price by $40,000 to $60,000 depending on your income and interest rate.

How Much Down Payment Do You Need?

You do not need 20% down to buy a home. Here are the most common down payment options:

Conventional loans typically allow as little as 3% down for first-time buyers and 5% for repeat buyers. However putting down less than 20% means you will pay private mortgage insurance which typically costs 0.5% to 1% of the loan amount annually.

FHA loans allow as little as 3.5% down with a credit score of 580 or higher. FHA loans have their own mortgage insurance premiums which must be paid for the life of the loan in most cases.

VA loans for eligible veterans and active duty service members allow 0% down with no mortgage insurance requirement.

USDA loans for eligible rural and suburban properties also allow 0% down.

Putting 20% down eliminates PMI saves money monthly and reduces your total loan amount significantly. However waiting to save 20% means more time renting and potentially missing home price appreciation in your market.

How Interest Rates Affect Affordability

Interest rates have a dramatic impact on how much home you can afford. A one percentage point increase in mortgage rates reduces your buying power by approximately 10%.

At a 6% interest rate a buyer with a $2,000 monthly housing budget can afford approximately a $333,000 loan.

At a 7% interest rate that same $2,000 monthly budget supports approximately a $301,000 loan.

At a 8% interest rate the maximum loan drops to approximately $273,000.

That is a difference of $60,000 in buying power from a single percentage point change in rates. Always check current mortgage rates before running your affordability calculation.

Frequently Asked Questions

What credit score do I need to buy a home?

Most conventional loans require a minimum credit score of 620. FHA loans allow scores as low as 580 with 3.5% down or 500 with 10% down. The higher your credit score the lower your interest rate will be — a score above 740 typically qualifies for the best available rates.

Does this calculator account for closing costs?

No — closing costs are separate from your down payment and typically run 2% to 5% of the home purchase price. On a $350,000 home closing costs could be $7,000 to $17,500. Make sure you have this budgeted in addition to your down payment.

Should I buy at the maximum amount I am approved for?

Not necessarily. Lenders tell you the maximum they will lend based on your financial profile. That does not mean it is the right amount for your personal budget and lifestyle. Many financial advisors recommend buying at the conservative 28% front-end ratio rather than the maximum 43% DTI to leave room for savings, emergencies, and life changes.

What happens if I have no existing debt?

With no existing debt your entire DTI capacity is available for housing which significantly increases your buying power. Someone with $6,000 monthly income and no debt can afford a much higher mortgage payment than someone with the same income but $800 in monthly debt payments.

Can I include rental income in my income calculation?

If you plan to buy a multi-unit property and live in one unit some lenders will count a portion of the projected rental income as qualifying income. Check with your lender about their specific guidelines for rental income.

How does property tax rate affect affordability?

Property tax rates vary widely by location. New Jersey and Illinois have some of the highest effective property tax rates in the country while Hawaii and Alabama have some of the lowest. A higher property tax rate reduces the mortgage payment you can afford within the same housing budget which directly reduces your maximum home price.

Estimates only. Actual loan approval depends on credit score, employment history, assets, reserves, and lender-specific guidelines. This calculator is for informational purposes only and does not constitute financial or mortgage advice. Always consult a licensed mortgage professional before making home buying decisions.