Home Affordability Calculator

“How much house can I afford” has two answers: the one a lender will sign off on, and the one you can live with. This calculator gives you the first properly — including the costs that quick calculators leave out — and makes it easy to test the second by lowering the limits yourself.

How to use the affordability calculator

1. Enter gross income for the household, per year or per month.
2. Add up other monthly debt payments — car, student loans, minimum card payments.
3. Enter the cash you have for the down payment, plus the rate and term you expect.
4. Fill in ongoing costs — property tax, insurance, HOA dues and the mortgage insurance rate.
5. Adjust the limits if you want a more cautious answer than 28/36.

The result is the highest price whose full monthly cost still fits inside your limits.

How the calculation works

Two ratios set the budget:

The smaller of the two becomes your monthly housing budget. Everything else follows from it.

From that budget the calculator finds the highest price whose total monthly cost still fits. It cannot be solved with a single formula, because property tax scales with the price and mortgage insurance switches off once your cash reaches 20% of the price. Instead the calculator tests prices and narrows the range until the payment lands exactly on the budget — the same answer, computed exactly.

Worked examples

A typical case. Income of 100,000 a year is 8,333 a month, so the front-end limit is 2,333 and the back-end limit is 3,000. With 400 a month of car and student loan payments, the back-end rule leaves 2,600 for housing, so the front-end rule is still the binding one at 2,333. With 60,000 down at 6.5% over 30 years, property tax of 1.2% and insurance of 1,800 a year, that budget supports a home in the low 300,000s — well under the “four times income” rule of thumb, because tax, insurance and mortgage insurance take a real bite.

Debt changes everything. Keep the same income and raise the other debts to 900 a month. Now the back-end rule leaves only 2,100 for housing, and the affordable price falls by tens of thousands. Clearing a car loan often buys more house than saving the same amount in cash.

A cautious buyer. Set the housing limit to 22% instead of 28%. The lender would still approve the larger loan, but the payment leaves room for savings, repairs and a bad year.

Common mistakes

• Treating the maximum as the target. Approval limits are based on gross income and ignore everything the lender does not see.
• Using a national average tax rate. Property tax varies enormously between areas. A one percentage point difference can move the affordable price by a five-figure amount.
• Forgetting closing costs. Down payment is not the only cash you need; closing costs are typically a few percent of the price on top.
• Leaving out HOA dues. Lenders count them in full, and they can quietly remove a chunk of the price you qualify for.
• Assuming the payment is fixed forever. A fixed rate fixes principal and interest only. Tax and insurance keep rising.

Glossary

These figures are estimates for planning, not a pre-approval or financial advice. Once you have a shortlist, run the exact numbers with a lender and with the mortgage calculator.

Last reviewed: September 24, 2026