Home Affordability Calculator

Category: Mortgage and Real Estate
- April 23, 2025
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Calculate how much house you can afford based on your income, debt, down payment, and current mortgage rates.

Income & Expenses

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Down Payment & Closing Costs

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Loan Details

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Property Details

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Affordability Settings

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About Home Affordability

Home affordability is determined by several factors including your income, existing debt, credit score, down payment, and current interest rates. Lenders typically use two key ratios to determine how much you can borrow:

Key Financial Ratios
  • Housing Expense Ratio: Your monthly mortgage payment (including principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income.
  • Debt-to-Income Ratio (DTI): Your total monthly debt payments (including your mortgage and all other debts) should not exceed 36% of your gross monthly income.
Down Payment Considerations
  • 20% Down Payment: The traditional amount, which allows you to avoid Private Mortgage Insurance (PMI).
  • Less than 20% Down: You'll typically need to pay PMI, which protects the lender if you default on your loan.
  • Down Payment Assistance: Many first-time homebuyers qualify for down payment assistance programs that can help reduce the upfront cash needed.
Other Homeownership Costs

Remember that your mortgage payment isn't the only cost of homeownership. Also budget for:

  • Home maintenance and repairs (typically 1-3% of home value annually)
  • Utilities (water, electricity, gas, internet, etc.)
  • Potential HOA or condo fees
  • Landscaping and lawn care
  • Furniture and appliances

What Is the Home Affordability Calculator?

The Home Affordability Calculator is a free tool that helps you estimate how much house you can afford based on your income, debt, savings, and mortgage terms. It's designed to assist in early planning, giving you a realistic picture of your home buying power before speaking to a lender.

Whether you’re a first-time homebuyer or planning your next move, this house affordability calculator offers clarity and confidence by breaking down the monthly mortgage payment and up-front costs involved.

How Does It Work?

The calculator estimates the maximum home price you can afford by factoring in several key financial inputs, including your income, debt payments, loan interest rate, and down payment. It uses commonly accepted financial ratios to ensure your estimated mortgage fits within recommended affordability guidelines.

Key Formulas Used:
Monthly Income = Annual Income / 12
Max Housing Expense = Monthly Income × Housing Expense Ratio (e.g., 28%)
Max Total Debt = Monthly Income × Debt-to-Income Ratio (e.g., 36%)
Max Mortgage Payment = Max Total Debt − Other Monthly Debts
Loan Amount = Home Price − Down Payment
Monthly Payment = Principal + Interest + Taxes + Insurance + PMI (if applicable) + HOA Fees

Why Use This Calculator?

  • See how much home you can realistically afford based on your current finances
  • Plan for upfront costs like down payment and closing fees
  • Get a full breakdown of your estimated monthly mortgage costs
  • Use as a loan affordability guide before talking to a lender
  • Evaluate how loan terms or interest rates affect your buying power

Key Features

  • Home loan estimate based on your income, debts, and chosen loan term
  • Detailed monthly mortgage breakdown including taxes, insurance, HOA, and PMI
  • Clear visuals like charts and tables for easy understanding
  • Flexible inputs for down payment and closing costs (in both dollars and percentages)
  • Option to include or exclude PMI based on your down payment size

How to Use It

  1. Enter your annual income and any current monthly debts
  2. Input your expected down payment and closing cost estimates
  3. Select your preferred loan term and current interest rate
  4. Fill in estimates for property taxes, insurance, HOA fees, and PMI rate
  5. Adjust your housing expense and debt-to-income limits if needed
  6. Click “Calculate Affordability” to see your results

How This Tool Helps

This tool functions as more than just a mortgage payment guide—it’s a comprehensive home financing planner. You’ll understand how much home you can afford, what your monthly mortgage payment will look like, and how much cash you’ll need upfront.

It’s especially useful when comparing properties, working with real estate agents, or preparing for a mortgage pre-approval. It’s also ideal as a home loan estimator or a loan affordability check if you're just getting started.

Frequently Asked Questions

What is a safe percentage of income to spend on housing?

Lenders usually recommend that no more than 28% of your gross monthly income goes toward housing expenses. This is known as the Housing Expense Ratio.

What is the Debt-to-Income Ratio?

Your DTI ratio compares your total monthly debt payments to your monthly gross income. Most lenders prefer this to be under 36%.

What if my down payment is under 20%?

You may be required to pay Private Mortgage Insurance (PMI), which protects the lender. This calculator lets you include or exclude PMI in your estimate.

Can I change the interest rate?

Yes, you can adjust the rate to reflect current market conditions or rates offered by your lender. This also makes the calculator useful as a loan interest calculator.

Does this replace lender pre-approval?

No, it’s a planning tool. You should still consult a lender for a full loan eligibility estimate and official pre-approval.

Related Tools You Might Like

  • Mortgage Amortization Calculator: See how your loan gets paid off over time
  • Mortgage Overpayment Tool: Understand how extra payments can shorten your loan
  • Refinance Calculator: Estimate potential savings from refinancing
  • Debt to Income Ratio Calculator: Check if your DTI is within lending limits
  • Down Payment Calculator: Plan how much you need to save upfront