Affordability Calculator

What Affects How Much House You Can Afford?

Buying a home is a big step, and figuring out what you can afford depends on a few key things: your income, monthly bills, and how much you’ve saved for a down payment. The interest rate on your loan also plays a huge role—lower rates mean lower monthly payments, which can stretch your budget further. Your spending habits and financial goals matter too, but getting pre-approved for a mortgage is a smart way to lock in a realistic budget.

How to Figure Out Your Home Budget

Our calculator makes it easy to estimate what you can afford. You can start with your income, debts, and down payment, or plug in a monthly payment you’re comfortable with. Either way, you’ll get a clear picture of your homebuying power.

We’ve also included options to fine-tune your estimate by adding things like property taxes, homeowner’s insurance, or HOA fees. Keep reading to understand each part of the calculator and how it helps you plan your housing budget.

Your Yearly Income

This is how much you earn before taxes or deductions, which you can find on your W2. If you’re buying with someone else, add both of your incomes together to get the total.

Your Monthly Bills

These are the regular payments you make each month, like car loans, credit card minimums, or student loans. For example, if you pay $200 for your car and $75 on a credit card, your total monthly debt is $275. You can tweak this number in our calculator to see how it affects your budget.

Down Payment

This is the cash you put down when buying a home. Most loans need at least 3% of the home’s price, but 20% is ideal—it lowers your monthly payment and skips extra costs like private mortgage insurance (PMI). For a $300,000 home, a 3% down payment is $9,000, while 20% is $60,000.

Debt-to-Income Ratio (DTI)

Your DTI is your monthly debt payments divided by your gross monthly income, shown as a percentage. It’s a key number lenders use to see if you can handle a mortgage. Our calculator starts with a 36% DTI, but you can adjust it. Want to check your DTI? Try our DTI Calculator for a quick estimate.

Interest Rate

This is what lenders charge you to borrow money, shown as a yearly percentage of your loan. A lower rate means a cheaper monthly payment. Our calculator uses the national average rate, but your actual rate depends on things like your credit score and down payment.

Loan Term

This is how long you’ll take to pay off the mortgage. A 30-year loan (360 months) is the most common, but shorter terms like 15 years are available. You can adjust the term in our calculator’s advanced settings to see what fits your plan.

Property Taxes

Homeowners pay yearly taxes based on their home’s value, which can impact what you can afford. Tax rates vary by location, so our calculator includes a default rate, but you can change it in the advanced options to match your area.

Homeowner’s Insurance

Most lenders require insurance to protect your home from damage. Costs depend on your location and coverage, but a rough guide is $35 per month for every $100,000 of home value. You can enter a specific amount in our calculator’s advanced settings.

Private Mortgage Insurance (PMI)

If your down payment is less than 20%, lenders often require PMI to cover their risk if you can’t pay the loan. Our calculator estimates PMI based on your home price and down payment, and you can turn it on or off in the advanced options.

HOA Fees

If you’re buying a condo or townhome, you might pay monthly fees to a homeowners’ association (HOA) for shared spaces or services. These fees affect your budget, so you can add them in the calculator’s advanced settings.

How Much Mortgage Can I Get?

Lenders use your income and debts to decide how much they’ll lend you through a process called pre-qualification. After reviewing your finances, they’ll give you a letter stating your loan amount. Get pre-qualified to confirm your budget and shop with confidence.

Where Are Homes Most Affordable?

A recent study showed that about one in four homes (27%) on the market in September 2024 were affordable for the average household. That’s down from before the pandemic but better than last year, thanks to lower mortgage rates and more homes for sale. Here’s a look at some of the most budget-friendly cities:

Common Questions About Home Affordability

What’s the Most House I Can Afford?

You might have heard of the 28/36 rule, but lenders often use a 36/43 guideline. This means your mortgage payment (including taxes and insurance) shouldn’t be more than 36% of your monthly income before taxes, and your total debts (like car loans or student loans) shouldn’t exceed 43%. For example, if you earn $4,000 a month, your mortgage payment should stay under $1,440 ($4,000 × 0.36), and all your debts combined should be less than $1,720 ($4,000 × 0.43).

How Much Can I Afford with an FHA Loan?

FHA loans are more flexible, typically using a 31/43 rule. Your mortgage payment should be no more than 31% of your monthly income, and total debts should stay under 43%. You can often qualify with a 3.5% down payment if your credit score is 580 or higher, or 10% if it’s between 500 and 579.

What About VA Loans?

If you’re a veteran or active military, a VA loan can be a great option. They don’t require a down payment or PMI, but you’ll pay a one-time funding fee. Your total monthly debts, including the mortgage, shouldn’t exceed 41% of your income.

How Much Should I Spend on a Home?

Our calculator gives you a starting point, but your comfort level matters most. Think about your monthly expenses and savings goals. After buying, you should have enough savings for at least three months of mortgage payments plus other bills to stay financially secure.