Home Affordability Calculator
Determine how much house you can afford based on your income, debts, and down payment.
Monthly Payment Breakdown
Annual Income
Enter your total annual household income before taxes.
Monthly Debts
Enter your total monthly debt payments (credit cards, car loans, student loans, etc.).
Down Payment
Enter how much you plan to put down on your home purchase.
Debt-to-Income Ratio
This ratio determines how much of your income can go toward housing and debt payments.
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Understanding Home Affordability
What Determines How Much House You Can Afford?
Several factors influence how much house you can afford, including your income, existing debt, credit score, down payment, interest rates, and other housing expenses like property taxes and insurance.
Debt-to-Income Ratio (DTI)
Your debt-to-income ratio is a key factor that lenders use to determine how much you can borrow. This ratio compares your monthly debt payments to your monthly income. Most lenders prefer a DTI ratio of 36% or less, though some loan programs allow for higher ratios.
The 28/36 Rule
Many financial advisors recommend the 28/36 rule: spend no more than 28% of your gross monthly income on housing expenses and no more than 36% on total debt (including housing). This helps ensure you don't become "house poor" with too much of your income going toward housing.
Down Payment Considerations
A larger down payment can increase how much house you can afford by reducing your loan amount and potentially eliminating the need for private mortgage insurance (PMI). Conventional loans typically require at least 3-5% down, while 20% down helps you avoid PMI.
Other Housing Costs
Remember that your monthly housing costs include more than just principal and interest on your mortgage. You'll also need to budget for:
- Property taxes
- Homeowners insurance
- Private mortgage insurance (if down payment is less than 20%)
- HOA fees (if applicable)
- Maintenance and repairs
- Utilities