How Much House Can I Afford?
Before you start house hunting, it helps to know your price range. This home affordability calculator estimates the most expensive home you can buy based on your gross income, monthly debt payments, down payment, interest rate, property tax, insurance and HOA dues. It applies the same debt-to-income (DTI) guidelines lenders use, then shows the maximum home price, loan amount and full monthly payment.
The 28/36 Rule and Debt-to-Income Ratios
Lenders look at two ratios. The housing ratio (front-end) compares your total monthly housing payment to your gross monthly income; 28% is a common limit. The total debt ratio (back-end) adds your other monthly debts, such as car loans, student loans and credit card minimums; 36% is a conservative limit, and many programs allow up to 43% or more.
Your maximum housing payment is the lower of the two limits. The calculator then works backward to find the loan amount and home price that payment can support, including property tax and insurance.
Example: with $100,000 income, $500 in monthly debts, $60,000 down and a 6.5% 30-year rate, the 28/36 guideline allows a $2,333 monthly housing payment. With a 1.1% property tax rate and $1,500 a year in insurance, that supports a home price of about $357,500.
Ways to Afford More House
- Pay down monthly debts, especially if the total debt ratio is what limits you.
- Save a larger down payment. Reaching 20% also avoids PMI on most conventional loans.
- Improve your credit score to qualify for a lower interest rate.
- Compare property tax rates between towns, since they can change your budget a lot.
Frequently Asked Questions
What income counts for home affordability?
Lenders use stable gross (pre-tax) income, such as salary, steady hourly pay, and documented self-employment, bonus or rental income. Include all borrowers who will be on the loan.
Should I buy the most expensive home I qualify for?
Not necessarily. DTI limits show what a lender may approve, not what is comfortable. Leave room for savings, repairs and maintenance (often 1–2% of the home value per year) and other goals.
Does this include closing costs?
No. Closing costs are typically 2–5% of the purchase price and are paid in addition to your down payment. Set that money aside separately.