Home Affordability Calculator

How much house can I afford?

As much as your monthly housing payment can carry once your debt-to-income limits have had their say, plus what your cash puts down. This calculator finds that price: it takes the lower of two limits on your gross monthly income, subtracts property tax, insurance, HOA dues and PMI at each possible price, and finds the highest price whose full payment still fits. It also says which limit caps the answer, whether PMI applies and how much cash goes to closing costs.

Two other starting points use the same math. Budget skips the ratios and finds the price for a monthly payment you choose. Price turns the question around and finds the gross income a particular home needs. The result is an educational estimate, not a lending decision or a pre-approval.

How to use it

• Start from: Income (the usual case), Budget or Price.
• Gross income: pay before taxes and deductions for everyone on the loan, from a pay stub or offer letter. Choose how often it arrives: yearly, monthly, twice a month, every 2 weeks or weekly.
• Monthly housing budget (Budget only): all you want to spend on the home each month, including tax, insurance, HOA dues and PMI. Home price (Price only): the price to test.
• Monthly debt payments: the minimum monthly payments on car, student and personal loans, credit cards, leases, child support and alimony. Leave out your current rent, which stops when you buy, and the new mortgage, which the calculator adds.
• Cash available: savings you can spend on the purchase after keeping an emergency cushion. It pays the closing costs first and the rest becomes the down payment.
• Closing costs (optional): a percentage of the price, such as 3 (see the cash section below). Leave it blank if the seller or lender covers them.
• Minimum down (optional): the smallest down payment your loan program allows, as a percentage of the price.
• Interest rate and loan term: the yearly rate and the term in years from a rate quote.
• Property tax: the yearly tax as a percentage of the price. A listing’s tax history divided by its price gives a local estimate.
• Home insurance: a homeowners insurance quote, yearly or monthly. HOA dues (optional): per month.
• PMI rate and PMI threshold: the yearly private mortgage insurance premium as a percentage of the loan, and the down payment share below which it is charged (20 is the usual figure for a conventional loan).
• Front-end limit and back-end limit: the debt-to-income limits to test, in percent. Ask your lender which ones it uses.

Results update as you type. The Try buttons load cases worked through on this page. The What if tabs repeat the calculation at other rates, incomes, cash amounts and back-end limits, each with a CSV download. Save for comparison keeps up to three scenarios side by side with the change from the first. When there is a loan, Continue in the Loan Payment Calculator carries the loan amount, rate and term over for a payment schedule.

How lenders use debt-to-income ratios

A debt-to-income ratio (DTI) divides monthly debt payments by gross monthly income. Lenders typically look at two of them:

• The front-end (housing) ratio counts only the new housing payment: principal, interest, property tax, insurance, HOA dues and mortgage insurance.
• The back-end (total) ratio adds every other monthly debt payment to that housing payment.

Each limit caps the housing payment in its own way, and the lower cap wins:

• $M$ is the most the housing payment may be each month.
• $I$ is gross monthly income: yearly income ÷ 12.
• $f$ and $b$ are the front-end and back-end limits as decimals (28% is 0.28).
• $D$ is the total of your other monthly debt payments.

With no other debts, the front-end limit usually binds. Each dollar of car or student loan payment lowers the back-end cap by a full dollar, so modest debts can make the back-end limit the one that matters, as in the worked example below.

The 28/36 guideline and why limits vary

The example uses 28% and 36%, the pairing known as the 28/36 rule of thumb. It is a starting point for the inputs, not a lending standard. The CFPB notes that different loan products and lenders have different DTI limits. Freddie Mac’s homebuyer guide, for instance, calls a housing ratio under 30% and a total ratio under 45% ideal, and Fannie Mae’s Selling Guide sets different maximum ratios for loans underwritten by hand and by its automated system, with higher ones allowed for borrowers with stronger credit and more savings.

So type in the limits that apply to you, or test a few. The DTI tab shows the price at back-end limits 3 and 6 points either side of yours. In the worked example, moving from 36% to 39% raises the price only from $281,029 to $287,325, because at 39% the 28% front-end limit takes over as the cap.

What goes into the monthly housing payment

The payment the limits apply to is the full monthly cost, not just the loan:

• Principal and interest on the loan $L$, at a monthly rate $i$ (the yearly rate ÷ 12) over $n$ monthly payments:

• Property tax: the yearly rate × the price ÷ 12, usually collected into an escrow account with the payment.
• Homeowners insurance: the yearly premium ÷ 12, often escrowed too.
• HOA dues, if the home has them.
• PMI while the down payment is under the threshold: the yearly PMI rate × the loan ÷ 12.

Tax grows with the price you are solving for, so the calculator takes it as a percentage rather than a fixed dollar figure. A fixed monthly tax estimated for a cheaper home would stay the same as the price rises and overstate the price you can afford.

Worked example: $90,000 income, $650 of debts, $45,000 cash

The inputs: $90,000 a year gross income, $650 a month of car and student loan payments, $45,000 of cash, 3% closing costs, 6.5% for 30 years, 1.1% property tax, $1,500 a year of insurance, no HOA, PMI at 0.6% of the loan a year below 20% down, and limits of 28% and 36%.

1. Monthly income: $90,000 ÷ 12 = $7,500.00.
2. Front-end cap: 28% × $7,500 = $2,100.00. Back-end cap: 36% × $7,500 − $650 = $2,050.00. The lower one, $2,050.00, is the most for housing, so the back-end limit binds.
3. Costs per dollar: P&I at 6.5% over 360 payments is 0.00632068 a month per dollar borrowed ($6.32 per $1,000). Tax is 1.1% ÷ 12 = 0.000916667 per dollar of price, PMI 0.6% ÷ 12 = 0.0005 per dollar of loan, and insurance $1,500 ÷ 12 = $125.00 a month.
4. At a price H, closing costs take 3% of H from the $45,000, so the loan is 1.03 × H − $45,000. The down payment stays at 20% or more only up to $45,000 ÷ 23% = $195,652, so above that PMI applies.
5. Setting tax + insurance + (P&I + PMI) × loan equal to $2,050.00 and solving: H = ($2,050 − $125 + 0.00682068 × $45,000) ÷ (0.000916667 + 0.00682068 × 1.03) = $281,029.94, rounded down to $281,029.
6. At that price, closing costs are $8,430.87, the down payment $36,569.13 (13.0% of the price) and the loan $244,459.87.
7. The payment: $1,545.15 principal and interest + $257.61 tax + $125.00 insurance + $122.23 PMI = $2,049.99 a month. That is 27.33% of income for housing and 36% with the other debts.

Rounding the price down to the dollar keeps the payment at or under the cap.

How your down payment and PMI change the answer

Each extra dollar of cash adds a little less than a dollar of price, about 86 cents with the worked example’s inputs, because a higher price also brings more tax and closing costs. Crossing the PMI threshold is the exception:

PMI makes the cost jump. With $70,000, a price just above $304,347 would drop the down payment below 20% and add $121.74 of PMI at once, taking the payment to $2,064.67, over the $2,050.00 cap. So the price stops where the down payment is exactly 20%, with the payment at $1,942.93, well under the cap. With $5,000 more cash, the price that uses the whole payment is PMI-free, and it is $18,671 higher. The calculator finds these jumps exactly and says when one sets the price; the Cash tab shows the price at other cash amounts.

If your loan program has a minimum down payment, enter it. When your cash can’t cover the closing costs and that minimum at the price your payment allows, the calculator says so, caps the price there, and shows how much more cash the higher price would take.

Cash you need beyond the down payment

The CFPB’s approach is to start from your savings, set aside money for other goals and an emergency cushion of three to six months of expenses, and treat what is left as the cash available for closing. Closing costs typically run 2% to 5% of the price and come out of that cash before the down payment. This is why the calculator asks for cash rather than a down payment: in the worked example, $45,000 of cash becomes a $36,569.13 down payment once $8,430.87 of closing costs is paid.

Also expect costs the payment leaves out: moving, repairs, maintenance and utilities, and tax and insurance bills that can rise over time.

How much house can I afford on my salary?

Divide the salary by 12, apply both limits, and solve for the price as above. The table uses the worked example’s other inputs ($650 of debts, $45,000 of cash and the same rate and costs) to show how the answer moves with income. It is an illustration, not a guide to your own price.

From $97,500 a year, where 28% of income equals 36% of income less the $650 of debts, the front-end limit takes over. The same $45,000 is also a smaller share of each bigger price, so PMI applies from $75,000 up. Type your own income, or open the Income tab to see the price at four incomes around yours.

Reading the result

• The headline is the estimated highest price, rounded down to the dollar, with the down payment, the loan and what caps the price. In Price mode it is the gross income the home needs, rounded up to the dollar.
• The tiles give the monthly payment and how much room it uses, the loan, the down payment and its share of the price, both DTI ratios at that price with the one that sets the payment, and PMI.
• The bar splits the monthly payment into principal and interest, tax, insurance, HOA dues and PMI, with each part’s share.
• How this was calculated lists every step with your numbers, ending with a check that the payment fits.
• What if reruns the calculation at other rates, incomes (or budgets, or prices), cash amounts and back-end limits. Your own row is marked. A notice explains when cash or the start of PMI sets the price, and when no price fits at all, it says why and what would change that.

Assumptions and limitations

• The rate is fixed for the whole term with equal monthly payments. Adjustable-rate loans and loans with interest-only periods are not modeled.
• PMI is a flat yearly percentage of the loan, charged only while the down payment is under the threshold. Lenders can also offer PMI as a one-time premium paid at closing, or part at closing and part monthly, which is not modeled, so ask for their figures. FHA loans require mortgage insurance at any down payment; setting the PMI threshold to 100 approximates that.
• Property tax is a percentage of the price. Your bill is based on the assessed value, which can differ, and tax and insurance can rise after you buy.
• Income is taken as stable and fully counted. Lenders verify income and may count bonuses, commissions or self-employment income differently.
• Loan size limits, credit score rules and cash reserve requirements are not checked.
• The price is rounded down to the dollar and other amounts are rounded to the cent for display.

Common mistakes

• Using take-home pay. DTI limits apply to gross income before taxes and deductions. Net pay makes the price too low.
• Counting rent or the new mortgage as a debt. Monthly debts are your other obligations. Rent ends when you buy, and the calculator adds the new housing payment itself.
• Entering all your savings as cash. Keep an emergency cushion out of it, and enter closing costs, or the down payment in the result will be larger than the one you can make.
• Mixing up yearly and monthly amounts. Insurance and income each have a frequency choice. $1,500 entered as monthly would be $18,000 a year.
• Putting PMI on the price. The PMI rate applies to the loan, not the home price.
• Treating 28/36 as the lender’s rule. Limits differ by lender and loan program, and a price that fits the ratios can still crowd out savings and daily costs.