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This Home Affordability Calculator helps you determine the maximum home price you can afford based on your income, debts, and savings. It uses lender guidelines to give you a realistic budget before you start house hunting.
Step-by-Step Instructions
Enter your gross annual household income.
Enter your monthly debt payments.
Enter your down payment amount and expected interest rate.
Review your maximum home price and monthly payment.
Use before house hunting to set a realistic budget, when comparing homes in different price ranges, or evaluating how life changes affect affordability.
- •First-time Homebuyers
- •Real Estate Investors
- •Financial Planners
- •House Hunters
Your home affordability results show what lenders may approve, but remember: what you CAN borrow isn't always what you SHOULD borrow. Leave room in your budget for emergencies and lifestyle.
What Each Result Means
Maximum Home Price
The highest home price you can afford based on income and debts.
Interpretation: This is your upper limit. Many financial advisors recommend buying 10-20% below your max for financial flexibility.
Monthly Payment
Your estimated monthly mortgage payment (principal + interest).
Interpretation: Add 20-30% for taxes, insurance, and PMI to get your true monthly housing cost.
Debt-to-Income Ratio (DTI)
Your total monthly debts divided by gross monthly income.
Interpretation: Lenders prefer DTI under 43%. Premium rates require under 36%. Lower is better.
Down Payment Percentage
Your down payment as a percentage of home price.
Interpretation: 20% avoids PMI. 10-19% requires PMI but lower than FHA. Under 10% has higher rates and PMI.
What to Do With Your Results
Pay down existing debt before buying. Each $300/month debt reduction can increase buying power by $50,000+.
Factor in PMI cost (0.5-1% of loan annually). Consider FHA loans if down payment is 3.5%+. Or save more to reach 20%.
Consider buying below your max. A slightly smaller home means lower payments, taxes, insurance, and maintenance - more financial breathing room.
See how different scenarios play out with real numbers and detailed analysis
Jessica and Michael
32 years oldDual Income Couple - Teacher and IT ProfessionalCombined income $135,000. Have $50,000 saved for down payment. $500/month in student loans. First-time buyers.
The Challenge
Determine how much house they can afford and whether to put 10% or 20% down.
Starting Values
Calculation Breakdown
Calculate max housing payment (28% of gross income)
$135,000 ÷ 12 × 0.28 = $3,150/month for housing
Calculate max total debt payments (36% DTI)
$135,000 ÷ 12 × 0.36 = $4,050 total. Minus $500 existing = $3,550 available
Use conservative limit
$3,150/month for housing (28% rule is the constraint)
Calculate max home price with 20% down
~$475,000 home price (with $50k = 10.5% down for this price)
Results
Max Home Price
$475,000
With 10.5% down ($50k)
Monthly Payment (P+I)
~$2,700
Plus taxes, insurance, PMI
Total Monthly Housing
~$3,200
Including taxes/insurance/PMI
DTI with Mortgage
33%
Under 36% - good
Key Insights
- They can afford up to $475k but paying PMI with 10.5% down
- Buying at $425k would eliminate PMI (11.8% down = not quite 20%)
- A $400k home with 12.5% down means lower payments and more savings buffer
- Recommended: Buy in $375k-$425k range to stay comfortably within budget
Still have questions? Check our financial glossary for definitions or explore our learning resources.
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