House Affordability Calculator

Calculate how much house you can afford based on your income and finances.

Financial Information

$100,000
$500

Credit cards, car loans, student loans, etc.

$50,000
6.5%
30 years
1.2%
$1,500

What You Can Afford

Maximum Home Price

$379,606

Max Loan Amount:$329,606
Down Payment:$50,000
Monthly Payment:$2,333
28% Rule Limit:$2,333/mo
36% Rule Limit:$2,500/mo

About This Calculator

The House Affordability Calculator helps you determine how much house you can afford based on your income, existing debt, down payment, and other factors. This tool uses standard lending guidelines (28% and 36% rules) to estimate your maximum affordable home price.

The calculator considers your monthly income, existing debt payments, down payment amount, interest rate, and additional costs like property taxes and insurance to provide a realistic estimate of what you can afford.

Formula & Calculation Method

House Affordability Calculation:

28% Rule: Max Housing Payment = Monthly Income × 0.28
36% Rule: Max Total Debt = Monthly Income × 0.36
Max Housing (36%) = Max Total Debt - Existing Monthly Debt
Available for P&I = Max Housing Payment - Taxes - Insurance
Max Loan = P&I × [(1+r)^n - 1] / [r × (1+r)^n]
Affordable Price = Max Loan + Down Payment

The 28% rule limits housing costs to 28% of gross income. The 36% rule limits total debt (including housing) to 36% of gross income. The calculator uses the more restrictive of the two.

How to Use This Calculator

  1. Enter Annual Income: Input your total annual gross income (before taxes).
  2. Enter Monthly Debt: Input existing monthly debt payments (credit cards, car loans, etc.).
  3. Enter Down Payment: Input the amount you have saved for a down payment.
  4. Enter Interest Rate: Input expected mortgage interest rate percentage.
  5. Enter Loan Term: Input mortgage term in years (typically 15, 20, or 30 years).
  6. Enter Property Details: Input annual property tax rate and home insurance cost.
  7. View Results: See affordable home price, maximum loan amount, and monthly payment.

Frequently Asked Questions

What are the 28% and 36% rules?

The 28% rule says housing costs shouldn't exceed 28% of gross monthly income. The 36% rule says total debt (housing + other debts) shouldn't exceed 36% of gross monthly income. Lenders typically use the more restrictive rule.

What is included in housing costs?

Housing costs include principal, interest, property taxes, homeowners insurance, and sometimes HOA fees and PMI (Private Mortgage Insurance) if your down payment is less than 20%.

How much down payment do I need?

Conventional loans typically require 20% down payment to avoid PMI. FHA loans may require as little as 3.5%. Larger down payments reduce monthly payments and may qualify you for better rates.

Should I use gross or net income?

Use gross (before tax) income, as this is what lenders typically use. However, consider your net income when deciding what you're actually comfortable paying each month.

Expert Reviewed

This calculator was reviewed by NumCalculators Editorial Team, Multi-disciplinary Expert Team

Updated: 12/15/2024