Home Affordability Calculator
Calculate how much house you can afford based on your income, debts, and down payment. Get personalized recommendations using the 28/36 rule.
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How Much House Can You Afford?
Determining how much house you can afford is one of the most important steps in the home buying process. Our home affordability calculator uses the industry-standard 28/36 rule to help you understand your purchasing power based on your income, existing debts, and down payment.
The 28/36 Rule Explained
Lenders use the 28/36 rule as a guideline to determine how much you can borrow:
Your monthly housing expenses (mortgage payment, property taxes, insurance, HOA fees) should not exceed 28% of your gross monthly income.
Your total monthly debt payments (housing plus car loans, credit cards, student loans, etc.) should not exceed 36% of your gross monthly income.
Factors That Affect Home Affordability
Annual Income
Your gross annual income is the starting point. Higher income means you can afford a more expensive home. Be sure to include all sources of income that lenders will consider.
Existing Debts
Monthly debt obligations reduce how much you can spend on housing. Pay down high-interest debts before applying for a mortgage to improve your affordability.
Down Payment
A larger down payment means you can afford a more expensive home with the same monthly payment. Aim for 20% to avoid PMI and get better loan terms.
Interest Rate
Lower interest rates mean you can afford a more expensive home. Shop around for the best rate and consider improving your credit score before applying.
Credit Score
Your credit score affects both your interest rate and loan approval. A score of 740+ typically gets you the best rates. Scores below 620 may require FHA loans.
Beyond the Monthly Payment
When calculating affordability, don't forget about these additional costs:
- •Property Taxes: Typically 1-2% of home value annually, varies by location
- •Homeowners Insurance: $1,000-$3,000 annually depending on location and coverage
- •HOA Fees: $200-$400/month in many communities
- •Maintenance: Budget 1-2% of home value annually for repairs
- •Utilities: Water, electricity, gas, internet, trash - can add $300-$500/month
- •PMI: 0.5-1% of loan amount annually if down payment is less than 20%
Frequently Asked Questions
How much house can I afford based on my income?
A common rule of thumb is that your monthly housing payment should not exceed 28% of your gross monthly income. Your total debt payments (including housing) should not exceed 36% of your gross monthly income. These are known as the 28/36 rule.
What is the debt-to-income ratio?
Your debt-to-income (DTI) ratio is the percentage of your gross monthly income that goes toward paying debts. Lenders typically want to see a DTI of 43% or less, though lower is better. This includes your mortgage payment, credit cards, car loans, student loans, and other monthly debt obligations.
How does my down payment affect how much house I can afford?
A larger down payment means you can afford a more expensive home with the same monthly payment. It also helps you avoid PMI (Private Mortgage Insurance) if you put down 20% or more, which further reduces your monthly payment.
What other costs should I consider besides the mortgage payment?
Beyond your mortgage payment, you'll need to budget for property taxes, homeowners insurance, HOA fees (if applicable), maintenance and repairs, utilities, and possibly PMI. A good rule of thumb is to budget an additional 1-2% of the home's value annually for maintenance.