House Affordability Calculator

Estimate how much house you can afford

This calculator estimates a home-price ceiling from two monthly-income tests and an optional cash-to-close limit. Enter gross household income, recurring monthly debt payments, a down payment, mortgage assumptions, property tax, homeowners insurance, HOA dues, and a possible PMI rate. The result is a planning range, not a loan approval or appraisal.

How the affordability calculation works

The calculator first converts annual gross income to a monthly amount and adds any other gross monthly income. It then finds two possible housing budgets. The housing-ratio budget applies the entered front-end percentage to gross monthly income. The total-DTI budget applies the entered back-end percentage, then subtracts existing monthly debt payments. The lower amount controls.

housing budget = gross monthly income x housing ratio
DTI budget = gross monthly income x total DTI limit - monthly debts
maximum housing payment = lower of the two budgets

The estimated housing payment includes mortgage principal and interest, property tax, homeowners insurance, HOA dues, and PMI when the modeled down payment is below 20%. The calculator solves for the highest home price whose estimated payment stays within the controlling monthly budget.

Debt-to-income ratio

The Consumer Financial Protection Bureau defines DTI as monthly debt payments divided by gross monthly income. Gross income is income before taxes and payroll deductions. Existing obligations commonly include minimum credit-card payments, auto and student loans, personal loans, alimony, child support, and other recurring debts that a lender counts.

back-end DTI = (new housing payment + other monthly debts) / gross monthly income

The default 28% housing ratio and 36% total DTI are only editable planning assumptions. Different lenders, loan programs, automated underwriting systems, borrower profiles, and compensating factors can use different limits. HUD housing-counselor materials also explain that qualification uses the lower payment allowed by the housing ratio and the payment remaining after other debt. Do not treat a green result as approval.

What counts in the monthly housing payment

Principal and interest come from the loan amount, interest rate, and term. Property tax is estimated as a percentage of home price divided by 12. Homeowners insurance and HOA dues are entered directly. PMI is modeled as an annual percentage of the loan balance when the down payment is below 20%; real mortgage-insurance pricing depends on the loan and borrower.

Utilities, maintenance, repairs, furnishings, commuting, childcare, health expenses, and ordinary living costs are not part of the modeled lender-style housing payment. They still matter to a sustainable personal budget. A lender may approve more than feels comfortable after taxes and household expenses.

Down payment and loan amount

Select a percentage or dollar down payment. A percentage scales with the estimated home price. A dollar down payment stays fixed while the calculator searches for an affordable price. The estimated mortgage equals home price minus down payment.

loan amount = home price - down payment

A larger down payment usually reduces principal and interest. In this model, it also removes the entered PMI estimate when the down payment reaches at least 20% of the home price. Some loan products use different insurance rules, upfront premiums, funding fees, or eligibility requirements, so confirm the structure of the specific loan.

Cash available and closing costs

Cash available for closing creates a separate limit. The calculator estimates cash needed as down payment plus the entered closing-cost percentage. If cash available is zero, the cash constraint is ignored. Otherwise, the lower of the income-based price and cash-based price becomes the headline estimate.

estimated cash needed = down payment + home price x closing-cost rate

Actual cash to close can include lender and third-party fees, prepaid interest, initial escrow deposits, discount points, inspection costs, credits, earnest-money treatment, and other adjustments. Keep emergency savings separate when deciding how much cash is truly available.

Interest rate and loan term

The mortgage payment uses the standard fixed-rate amortization formula. A higher interest rate increases the monthly principal-and-interest payment for the same loan, reducing the home price supported by a fixed budget. A longer term usually lowers the required monthly payment but increases total interest if the loan remains outstanding for the full term.

monthly principal and interest = P x r(1 + r)^n / ((1 + r)^n - 1)

Here, P is principal, r is the monthly interest rate, and n is the number of monthly payments. The rate entered is a planning APR assumption; a quote can change with market conditions, points, credit profile, property type, occupancy, loan-to-value ratio, and lock timing.

Worked affordability example

Suppose gross household income is $100,000 per year, other monthly income is zero, and existing monthly debts are $500. A 28% housing ratio allows about $2,333 per month. A 36% total DTI allows $3,000 after subtracting the $500 of other debt. The housing ratio is therefore the tighter monthly limit. The calculator then subtracts taxes, insurance, HOA, and applicable PMI from that budget and solves for the principal-and-interest payment and home price.

Changing only one assumption can materially change the result. Compare a higher rate, a lower down payment, or a more conservative DTI target. Use the mortgage calculator once you have a target purchase price and want a complete amortization schedule and extra-payment analysis.

Income limit versus cash limit

The results identify the controlling constraint. Income limited means the modeled monthly payment reaches a DTI budget before available cash is exhausted. Cash limited means the down payment and estimated closing costs cap the home price first. The results also show the income-only ceiling and cash-only ceiling so you can see which assumption is holding the estimate back.

Use a comfort budget, not only a qualification ceiling

Affordability is personal. Consider take-home pay, emergency reserves, retirement saving, maintenance, insurance deductibles, future tax increases, HOA assessments, transportation, family plans, and income stability. Try lower DTI percentages to create breathing room. The take-home pay calculator can help compare gross income with estimated after-tax pay. Use this affordability calculator's cash-only ceiling to check how the entered down-payment and closing-cost assumptions constrain the purchase price. For a chosen purchase price, use the down payment calculator to separate the down payment from estimated closing costs.

Frequently asked questions

What income should I enter?

Enter stable gross income before taxes and deductions that you reasonably expect a lender to document. Do not count uncertain income without understanding the applicable documentation rules.

Does this calculator guarantee mortgage approval?

No. Lenders also review credit, assets, reserves, employment, property, loan eligibility, documentation, and other underwriting requirements.

Why does PMI disappear at 20% down?

This planning model applies the entered PMI rate only below 20% down. Actual conventional, FHA, VA, USDA, and other programs follow different mortgage-insurance or fee rules.

Should I use the maximum result as my budget?

Not automatically. A lower price or more conservative DTI target may better protect savings and monthly cash flow.