Home Affordability Calculator

Calculate the maximum home price you can afford based on your income, existing debts, and down payment savings.

Annual Gross Income$80K

$/yr

$20K$500K

Monthly Debt Payments$300

$/mo

$0$5K/mo

Down Payment$40K

$0$200K

Annual Interest Rate7%

%/yr

2%12%

Annual Property Tax Rate1.2%

%/yr

0%3%

Annual Home Insurance$1.5K

$/yr

$0$5K/yr

Loan Term

Max Back-End DTI

Maximum Home Price

—

Maximum Loan Amount

—

Monthly P&I Payment

—

Total Monthly PITI

—

Front-End DTI

—

Back-End DTI

—

🏠 What is a Home Affordability Calculator?

A home affordability calculator answers the first question every home buyer must answer: how much house can I actually afford? It uses your income, existing debts, down payment, and current interest rates to calculate the maximum home price a lender is likely to approve and that you can comfortably sustain. Rather than guessing or relying on a rule of thumb, this calculator applies the same formulas mortgage underwriters use to assess your application.

The calculation works by applying two industry-standard debt-to-income limits. The front-end DTI rule states that your total housing cost (principal, interest, property taxes, and insurance, collectively called PITI) should not exceed 28% of your gross monthly income. The back-end DTI rule states that all monthly debt payments combined (PITI plus car loans, student loans, credit card minimums, and any other installment debt) should not exceed 36% to 50% of gross income depending on the loan type. This calculator applies both limits and uses whichever is stricter.

Real-world scenarios where this calculator is essential include first-time buyers wondering whether they should start looking at $350,000 homes or $450,000 homes, existing homeowners considering an upgrade, and buyers in high-cost markets trying to understand how far they need to stretch their budget. The tool lets you instantly see the impact of paying down debt (which frees up back-end DTI), saving a larger down payment (which directly raises the maximum price), or finding a home with lower property taxes (common when comparing urban and suburban areas).

Use this calculator as a planning tool, not a final approval. Lenders will verify every figure during underwriting, your actual rate depends on your credit score, and the loan amount this calculator shows is a ceiling, not a target. Most financial planners recommend targeting a home price that uses 80-90% of your maximum, leaving room for rate changes and unexpected expenses.

📐 Formula

Max PITI = min(Income × 0.28, Income × DTI% − Monthly Debts)

Front-End DTI: Max PITI ≤ Gross Monthly Income × 28%

Back-End DTI: Max PITI ≤ Gross Monthly Income × DTI% − Existing Monthly Debts

Max P&I = Max PITI − Monthly Property Tax − Monthly Insurance

Loan Amount = Max P&I × (1 − (1 + r)⁻ⁿ) ÷ r

Max Home Price = Loan Amount + Down Payment

r = Monthly rate = Annual rate ÷ 12 ÷ 100

n = Loan term in months (30 years = 360, 15 years = 180)

Example: $80,000 income, $300 debts, $40,000 down, 7% rate, 1.2% tax, $1,500 insurance, 43% DTI, 30-year term: Max PITI = min($1,867, $2,567) = $1,867. After tax/insurance, Max P&I is roughly $1,617. Loan = $1,617 x 150 = $243,000. Home price = $283,000.

📖 How to Use This Calculator

Steps

Enter your annual gross income - type your total household income before taxes. Use combined income if applying jointly.

Enter monthly debt payments - add car loans, student loans, credit card minimums, and any other installment debt. Do not include utilities or subscriptions.

Enter your down payment - type the amount you have saved. Every extra dollar of down payment raises your maximum home price by the same amount.

Set interest rate, property tax, and insurance - enter the current mortgage rate, the property tax rate for your target area (check the county assessor website), and your estimated annual insurance premium.

Choose loan term and DTI limit, then calculate - select 30-year or 15-year term and your lender's DTI threshold. Click Calculate to see your maximum home price, PITI, and DTI ratios.

💡 Example Calculations

Example 1 - First-Time Buyer, $75,000 Income

Single buyer, $75,000/year income, $200/month student loans, $25,000 down

Gross monthly income = $75,000 / 12 = $6,250/month.

Front-end limit: $6,250 x 28% = $1,750/month max PITI. Back-end limit (43%): $6,250 x 43% - $200 = $2,688 - $200 = $2,488/month. Front-end is stricter: max PITI = $1,750.

Subtract property tax ($250/mo) and insurance ($125/mo): Max P&I = $1,750 - $250 - $125 = $1,375/month.

At 7%, 30-year: loan = $1,375 x (1 - (1.00583)^-360) / 0.00583 = $1,375 x 150 = $206,000. Home price = $206,000 + $25,000 = $231,000.

Result = Maximum home price $231,000 at the front-end DTI limit

Try this example →

Example 2 - Dual-Income Household, $140,000 Combined

Two incomes totaling $140,000/year, $600/month in debts, $60,000 down

Gross monthly income = $140,000 / 12 = $11,667/month.

Front-end limit: $11,667 x 28% = $3,267/month. Back-end limit (43%): $11,667 x 43% - $600 = $5,017 - $600 = $4,417/month. Front-end is stricter: max PITI = $3,267.

Subtract tax ($500/mo est.) and insurance ($150/mo): Max P&I = $3,267 - $500 - $150 = $2,617/month.

At 7%, 30-year: loan = $2,617 x 150 = $392,500. Home price = $392,500 + $60,000 = $452,500.

Result = Maximum home price $452,500 for a dual-income household

Try this example →

Example 3 - High Debt Load Impact

$100,000 income, $1,200/month in debts, $30,000 down, showing how debt reduces buying power

Gross monthly income = $100,000 / 12 = $8,333/month.

Front-end limit: $8,333 x 28% = $2,333/month. Back-end limit (43%): $8,333 x 43% - $1,200 = $3,583 - $1,200 = $2,383/month. Front-end is still stricter: max PITI = $2,333.

With $0 debt on the same income, the buyer could afford roughly $375,000. With $1,200/month debt, the max falls to about $310,000. The debt cost $65,000 in buying power. Paying off the debt before buying restores the full budget.

Result = $1,200/month debt reduces buying power by ~$65,000 compared to no debt

Try this example →

❓ Frequently Asked Questions

How much house can I afford on a $70,000 salary?+

At $70,000/year ($5,833/month), the 28% front-end rule caps your PITI at $1,633/month. With a 7% rate on a 30-year loan and $40,000 down, you can afford approximately $230,000 to $260,000 depending on property taxes and insurance in your area. Use this calculator with your specific local tax and insurance figures for a precise answer.

What is the 28/36 rule for buying a house?+

The 28/36 rule states that your housing costs (PITI) should not exceed 28% of gross monthly income, and all monthly debt payments (including PITI) should not exceed 36%. These are guidelines used by conventional mortgage lenders. FHA loans allow up to 31% front-end and 43% back-end. Some lenders approve loans at higher DTI ratios for borrowers with excellent credit and large reserves.

Does my credit score affect how much home I can afford?+

Yes, indirectly. Your credit score determines the interest rate you qualify for. A 760+ score might get a 6.9% rate while a 660 score might get 7.8%. On a $300,000 loan over 30 years, that 0.9% difference adds $170/month and over $60,000 in total interest. A higher rate reduces your maximum loan amount for the same monthly payment. Improving your credit score before applying is one of the most effective ways to increase buying power.

Should I use gross income or take-home pay for affordability?+

Lenders use gross income to calculate DTI ratios for qualification purposes. However, you should verify the payment is comfortable against your actual take-home pay. A mortgage PITI that is 28% of gross income may represent 38-42% of net take-home pay after taxes, depending on your effective tax rate. Many financial planners suggest targeting a PITI of no more than 25-30% of actual take-home pay to maintain a healthy cash cushion for savings and emergencies.

What is included in a monthly mortgage payment (PITI)?+

PITI stands for Principal, Interest, Taxes, and Insurance. Principal reduces your loan balance. Interest is the cost of borrowing. Property taxes are collected monthly into an escrow account and paid to the local government annually. Homeowners insurance covers structural damage and is also escrowed. If your down payment is below 20%, private mortgage insurance (PMI) is also typically included, adding $50-$300/month depending on the loan size.

How does a 15-year mortgage affect my affordability?+

A 15-year mortgage has a lower interest rate (typically 0.5-0.75% less than 30-year) but a higher monthly payment because you are repaying the principal in half the time. For the same income and DTI limit, a 15-year loan gives you a smaller maximum home price than a 30-year loan. However, you pay far less total interest and build equity much faster. The 15-year option is best for buyers who can comfortably afford the higher payment and want to minimize total borrowing cost.

What property tax rate should I use in this calculator?+

Property tax rates vary dramatically by location. New Jersey averages 2.2% (highest in the US); Hawaii averages 0.3% (lowest). The US average is approximately 1.1%. Look up your specific county on the county assessor or tax collector website for the actual rate. You can also find the assessed value and current tax bill on Zillow or Redfin for any property you are considering.

How do existing debts reduce my home buying power?+

Every dollar of existing monthly debt (car, student loans, credit cards) is subtracted from your maximum back-end DTI allowance, directly reducing your housing budget. At 43% DTI with $80,000 income, your maximum total monthly debt is $2,867. With $500/month in existing debts, your maximum PITI drops to $2,367. With $1,000/month in debts, PITI falls to $1,867. Paying off debts before buying often makes more financial sense than saving extra for a down payment.

What is a front-end DTI vs back-end DTI?+

Front-end DTI (housing ratio) is your proposed PITI divided by gross monthly income. It measures how much of your income goes to housing alone. Lenders typically want this below 28%. Back-end DTI (total debt ratio) is all monthly debt payments (PITI plus all other debts) divided by gross income. Lenders typically want this below 36-43%. Both ratios are checked; the stricter one limits your approval. This calculator applies both and shows you which constraint is binding.

What is the maximum home price I can afford with no debts?+

With zero existing debts, your home buying power is limited only by the 28% front-end DTI rule (since no debts mean the back-end DTI is the same as the front-end). At $100,000 income, 7% rate, $50,000 down, 30-year term, and 1.2% property tax: max PITI = $2,333/month, max P&I = approximately $1,966, max loan = $295,000, max home price = $345,000. Use this calculator with your specific numbers for a precise result.

🔗 Related Calculators

How much house can I afford on a $70,000 salary?

At $70,000/year ($5,833/month), the 28% rule caps your total housing payment (PITI) at $1,633/month. With a 7% mortgage rate on a 30-year loan, a $1,400 P&I payment supports a loan of about $210,000. Add a $40,000 down payment and you can afford roughly a $250,000 home. Exact figures depend on property tax, insurance, and existing debts.

What is a debt-to-income ratio and why does it matter?

Debt-to-income (DTI) ratio is your total monthly debt payments divided by your gross monthly income. Lenders use it to assess how much of your income is already committed. A back-end DTI above 43% means more than 43 cents of every gross dollar goes to debt, which most lenders consider a risk threshold. Lower DTI gives you better rates and higher loan limits.

What is the 28/36 rule for home affordability?

The 28/36 rule says housing costs (mortgage principal, interest, taxes, and insurance) should not exceed 28% of gross monthly income (front-end DTI), and all monthly debts combined should not exceed 36% (back-end DTI). Conventional lenders commonly use these thresholds, though FHA loans allow up to 31% front-end and 43% back-end DTI.

How does down payment size affect how much house I can afford?

A larger down payment allows you to buy a more expensive home for the same monthly payment. If you can afford a $1,500 monthly P&I payment at 7% for 30 years, that supports a $226,000 loan. With a $20,000 down payment, the max home price is $246,000. With a $60,000 down payment, the max rises to $286,000 - $40,000 more home for $40,000 more down.

Does my gross income or net income determine affordability?

Lenders use gross income (before taxes) to calculate DTI ratios. However, your actual monthly budget should be based on net take-home pay. A 28% gross income housing cost may feel like 35-40% of your actual take-home pay after federal and state taxes. Run the numbers both ways to make sure the payment is comfortable on your actual paycheck.

What is included in PITI?

PITI stands for Principal, Interest, Taxes, and Insurance. Principal is the portion of your mortgage payment that reduces the loan balance. Interest is the cost of borrowing. Taxes are monthly property taxes (typically escrowed). Insurance is homeowners insurance (and PMI if your down payment is below 20%). Lenders use the full PITI payment, not just P&I, when calculating your DTI.

How much do I need to earn to afford a $400,000 house?

At 7% on a 30-year loan with 10% down ($40,000), the loan is $360,000 and the monthly P&I is approximately $2,395. Adding property tax of $500/month (1.5% annual rate) and insurance of $150/month gives a PITI of $3,045. At the 28% front-end rule, you need $3,045 / 0.28 = $10,875/month gross, or about $130,500 annual income. With existing debts, you may need more.

Can I afford more house if I have no other debts?

Yes, significantly. If you have zero existing monthly debts, the back-end DTI limit equals the front-end housing limit, so you are constrained only by the 28% rule. Someone with $500/month in car and student loan payments has that $500 subtracted from their maximum housing budget. Paying off debt before buying a home increases your buying power dollar for dollar.

📌 Quick Tips

💡Lenders typically use two rules: housing costs should not exceed 28% of gross monthly income (front-end DTI), and all monthly debts including the mortgage should not exceed 36-43% of gross income (back-end DTI). This calculator enforces both and uses the stricter limit.

💡A larger down payment directly increases your maximum home price because it reduces the loan you need. Every extra dollar of down payment adds a dollar to your home buying budget without changing your monthly payment calculation.

💡Get pre-approved before house hunting. Pre-approval tells you the exact maximum the lender will offer and shows sellers you are a serious buyer. Pre-approval is free and takes 1-3 days.

💡The 28/36 rule is a guideline, not a legal cap. Lenders can go to 43% or even 50% back-end DTI under FHA rules, but a lower DTI gives you a larger buffer for unexpected expenses and rate adjustments.

💡Do not forget one-time costs: closing costs run 2-5% of the purchase price, home inspection costs $300-$500, and moving costs can add $1,000-$5,000. Budget for these on top of your down payment.