How Much House Can You Afford?

Before you start shopping for homes, it’s essential to know what you can truly afford. Our Home Affordability Calculator uses your income, debts, expenses, and the 28/36 debt-to-income rule to calculate a realistic maximum purchase price and monthly housing payment.

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How This Calculator Works

Our Home Affordability Calculator estimates the maximum purchase price you can afford by considering your income, debts, recurring expenses, down payment, property tax rates, insurance costs, and optional PMI. It enforces the industry "28/36 Rule," meaning:

  • Housing costs (principal, interest, taxes, insurance) should not exceed 28% of gross monthly income.
  • Total debts (housing plus all other monthly debts) should not exceed 36% of gross monthly income.

To solve for maximum loan and home price, it uses the same amortization formula banks use to determine monthly principal and interest payments.

We then "reverse" this formula to figure out:
Loan Amount = (Affordable Mortgage Payment) ÷ (PMT Factor), and finally add your down payment to estimate the full home price you can afford.

Property taxes, insurance, and PMI (if needed) are added to the monthly payment estimate, making sure your total payment stays within DTI guidelines.

Tips: A larger down payment reduces PMI, lowers your monthly payment, and improves affordability. Shopping around for lower insurance and tax rates can significantly increase your maximum home price.