Financial

House Affordability Calculator

Find out how much house you can afford based on your income, debts, and down payment. Uses the 28/36 DTI rule used by mortgage lenders.

Calculation Inputs

Annual Gross Income ($)

Monthly Debt Payments ($)

Car loans, student loans, credit card minimums, etc.

Down Payment ($)

Interest Rate (%)

Loan Term (years)

Property Tax Rate (% /yr)

Home Insurance (% /yr)

Typically 0.25–1% of home value annually.

HOA Fee ($/mo)

Front-End DTI Limit (%)

Back-End DTI Limit (%)

Results computed instantly — your data never leaves your device.

Live Results

Real-Time

Max Home Price

$400,693

Max Loan Amount

$340,693

Max Monthly PITI

$2,800.07

Monthly Income

$10,000

Front-End DTI

28%

Limit: 28%

Back-End DTI

33%

Limit: 36%

Down Payment %

15%

Binding Constraint

Front-end DTI (28% limit)

100% Client-SidePrivate & Secure

Monthly Payment Breakdown

Principal & Interest$2,232.42 (80%)

Property Tax$400.69 (14%)

Home Insurance$166.96 (6%)

⚠ PMI (Private Mortgage Insurance) may apply if down payment is under 20% — typically 0.5–1.5% of the loan per year. Down payment is currently 15%.

How to Use the House Affordability Calculator

1
Enter your annual gross income (before taxes) and total monthly debt payments (car, student loan, credit cards).
2
Enter your available down payment, expected interest rate, and loan term.
3
Adjust property tax rate (varies by state/county), home insurance rate, and any HOA fees.
4
The calculator shows your maximum home price based on the 28/36 DTI rule used by most lenders.

Formula & Mathematical Basis

Front-End Limit: Max PITI = Monthly Income × (FrontEndDTI ÷ 100) Back-End Limit: Max PITI = Monthly Income × (BackEndDTI ÷ 100) − Monthly Debts Max PITI = min(Front-End Limit, Back-End Limit) Max P&I = Max PITI − Monthly Tax − Monthly Insurance − HOA Max Loan = Max P&I × [(1+r)^n − 1] ÷ [r × (1+r)^n] Max Home Price = Max Loan + Down Payment

Variable Key

PITI

Principal, Interest, Taxes, Insurance — total monthly housing cost

DTI

Debt-to-Income ratio, expressed as a percentage of gross monthly income

r

Monthly interest rate = Annual Rate ÷ 12 ÷ 100

n

Total monthly payments = loan term years × 12

Max P&I

Maximum allowable principal and interest payment after subtracting tax, insurance, and HOA from max PITI

📝 Property tax and insurance scale with home price, so the formula is solved iteratively. Starting with an estimate of Max P&I, the calculator converges on the correct home price within 6 iterations. FHA loans allow DTI up to 43/50%; jumbo loans are stricter.

Step-by-Step Examples

Dual-income household — $150k combined income

Scenario: $150,000 annual income, $800/mo existing debts, $60,000 down, 6.85% rate, 30-year term, 1.2% tax, 0.5% insurance.

1.Monthly income = $150,000 ÷ 12 = $12,500.
2.Front-end limit (28%): Max PITI = $12,500 × 0.28 = $3,500.
3.Back-end limit (36%): Max PITI = $12,500 × 0.36 − $800 = $3,700.
4.Binding constraint: front-end ($3,500).
5.Subtract estimated tax+insurance (≈1.7% ÷ 12 of home price) and iterate to find Max P&I.
6.Max loan ≈ $378,000; Max home price = $378,000 + $60,000 ≈ $438,000.

✅ Maximum home price: ~$438,000 | Max PITI: ~$3,500/mo

Practical Use Cases

Pre-qualification estimate before meeting with a mortgage lender
Setting a realistic home search budget on Zillow or Redfin
Understanding how paying off debts increases buying power
Comparing affordability across different interest rate scenarios
Determining how much more down payment is needed to qualify for a specific home
Exploring the effect of a co-borrower on maximum loan amount

Common Mistakes to Avoid

Using net income instead of gross income — lenders qualify based on pre-tax income.
Omitting non-mortgage debts — even a $300/mo car payment meaningfully reduces max home price.
Not budgeting for PMI when down payment is under 20% — it can add $150–$400/mo.
Ignoring closing costs (2–5% of purchase price) that reduce available cash for down payment.
Assuming approval at the maximum limit — qualifying for a loan and comfortably affording it are different.

Glossary of Terms

DTI (Debt-to-Income Ratio): The percentage of gross monthly income consumed by debt payments. Lenders use both front-end (housing only) and back-end (all debts) DTI.
Front-End DTI: Housing costs (PITI) as a percentage of gross monthly income. Most conventional lenders require this to be ≤28%.
Back-End DTI: All monthly debt obligations (housing + other debts) as a percentage of gross monthly income. Conventional limit is typically 36–43%.
PMI (Private Mortgage Insurance): Insurance required on conventional loans with less than 20% down. Protects the lender; cancelled when LTV reaches 80%.
Gross Income: Pre-tax income. Lenders use gross income (not take-home pay) for DTI calculations.
Pre-qualification: An informal estimate of how much a lender might lend, based on self-reported income and debts. Not a commitment to lend.

Frequently Asked Questions

What is the 28/36 rule?

▾

Lenders typically require your monthly housing costs (PITI) to be no more than 28% of gross monthly income (front-end DTI), and total debt including housing to be no more than 36% (back-end DTI). The calculator finds the maximum home price that satisfies both limits.

What counts as monthly debt?

▾

Include all recurring minimum debt payments: car loans, student loans, personal loans, and minimum credit card payments. Do not include utilities, groceries, or subscriptions — only loan/debt obligations.

Should I include PMI in affordability calculations?

▾

Yes, if your down payment is less than 20%. PMI typically costs 0.5–1.5% of the loan amount annually. Add it to your estimated monthly costs. PMI is automatically cancelled when your loan balance reaches 80% of home value.

How does down payment affect affordability?

▾

A larger down payment reduces the loan amount, lowering your monthly P&I payment. It also eliminates PMI above 20% down. Even a 5% increase in down payment can significantly raise the maximum home price you qualify for.

What is the difference between front-end and back-end DTI?

▾

Front-end DTI = housing costs ÷ gross income. Back-end DTI = (housing + all debts) ÷ gross income. The calculator uses whichever limit is more restrictive, which is how actual lenders underwrite mortgages.

Sources & References

[1]
Debt-to-Income Ratio for Mortgage Qualification— Consumer Financial Protection Bureau, 2024
[2]
Qualifying Ratios — Fannie Mae Selling Guide— Fannie Mae, 2024
[3]
FHA Loan Requirements— U.S. Department of Housing and Urban Development, 2024

CalculatorFree Real Estate Finance TeamLicensed Mortgage Broker Review & HUD Guidelines

DTI methodology cross-referenced with Fannie Mae underwriting standards and CFPB qualification guidelines.

Related Calculators

Mortgage Calculator

Calculate your monthly mortgage payment including principal, interest, taxes, and insurance (PITI). See the full amortization schedule.

Financial

Mortgage Amortization Calculator

View the complete amortization schedule for any mortgage. See exactly how each payment is split between principal and interest, year by year.

Financial

Rent Calculator

Calculate your true total cost of renting including utilities, insurance, parking, and fees. See 10-year projections with annual rent increases.

Financial

Rent vs. Buy Calculator

Compare the true financial cost of renting versus buying a home over time. Find your break-even year and net cost difference.

Financial

Loan Calculator

Calculate monthly loan payments, total interest, and view a full amortization schedule for any loan amount.

Financial

Rental Property Calculator

Analyze a rental property investment. Calculate monthly cash flow, cash-on-cash return, cap rate, and gross rent multiplier using real expenses.

Financial