Home Affordability Calculator
Find out how much home you can afford based on your income, monthly debts, down payment, and current interest rates.
Results
Visualization
How It Works
A home affordability calculator uses standard lending guidelines to estimate the maximum home price you can finance. Lenders use two key ratios: the front-end ratio (housing costs should not exceed 28% of gross income) and the back-end ratio (total debts should not exceed 36% of gross income).
The Formula
Max Home Price = Max Loan Amount + Down Payment
Variables
- 28% — Front-end DTI ratio - maximum share of gross income for housing costs
- 36% — Back-end DTI ratio - maximum share of gross income for all debts including housing
- PITI — Principal, Interest, Taxes, and Insurance - your total monthly housing cost
Worked Example
With $85,000 annual income ($7,083/month), 28% front-end allows $1,983 for housing. With $500/month debts, 36% back-end allows $2,550 - $500 = $2,050 for housing. The more restrictive is $1,983. After taxes and insurance, the max loan is roughly $280,000, so with $60,000 down, you can afford about $340,000.
Practical Tips
- Just because you qualify for a certain amount does not mean you should borrow that much. Leave room in your budget for savings and unexpected expenses.
- The 28/36 rule is a guideline. Some loan programs allow higher ratios (up to 43% or even 50% back-end for FHA).
- Do not forget closing costs, which typically run 2-5% of the home price and are due at closing in addition to your down payment.
- Property tax rates vary significantly by location. Research actual rates in areas where you are house hunting.
- A larger down payment reduces your loan amount and may eliminate PMI, improving affordability.
Frequently Asked Questions
What is the 28/36 rule?
The 28/36 rule is a lending guideline stating that your monthly housing costs should not exceed 28% of your gross monthly income (front-end ratio) and your total monthly debts including housing should not exceed 36% (back-end ratio).
How much house can I afford on a $100,000 salary?
At $100,000 with no debts, 20% down, and a 6.5% rate, you can typically afford a home around $420,000-$450,000. This varies based on your debts, down payment, location, and interest rate.
What debts count in the back-end ratio?
All recurring monthly debt payments count: car loans, student loans, credit card minimum payments, personal loans, alimony, and child support. Utilities, groceries, and subscriptions do not count.
Does pre-approval mean I can afford the home?
Pre-approval shows the maximum a lender will lend you, but it does not account for your full financial picture. Your comfortable budget may be lower than your pre-approved amount.
Should I put 20% down?
Putting 20% down avoids PMI and gives you instant equity, but it is not required. FHA loans allow 3.5% down, and VA loans allow 0% down. Balance your down payment against keeping an emergency fund.