Home Affordability Calculator

How Much House Can You Afford?

Income

Annual Gross Income

Co-Borrower Annual Income

Monthly Debt Payments

Car Loan Payment

Student Loan Payment

Credit Card Min. Payment

Other Monthly Debts

Loan Details

Down Payment

Interest Rate

Loan Term

Property Tax (annual)

Home Insurance (annual)

HOA Fee (monthly)

️ Disclaimer: Estimates only. Actual loan approval depends on credit score, lender policies and other factors. Consult a licensed mortgage professional.

Debt-to-Income (DTI) Analysis

DTI is the most important factor lenders use. Run the calculator first to see your personalised DTI analysis.

Run the calculator first.

DTI Thresholds by Loan Type

Loan Type	Max Front DTI	Max Back DTI	Notes

How Home Affordability Is Calculated

The 28/36 Rule

The most widely used lender guideline: 28% Rule (Front-End DTI): Monthly housing costs ≤ 28% of gross monthly income Housing costs = Principal + Interest + Tax + Insurance (PITI) 36% Rule (Back-End DTI): All monthly debts ≤ 36% of gross monthly income All debts = PITI + car loan + student loan + credit cards + etc. Conservative example: $10,000/month gross income Max housing (28%) = $2,800/month Max all debts (36%) = $3,600/month If existing debts = $900/month housing budget = $2,700/month

Step 1 - Max Monthly Housing Payment

Monthly Gross Income = Annual Income ÷ 12 Front-End Max = Monthly Income × 28% Back-End Max = Monthly Income × 36% − Existing Debts Max Housing Payment = min(Front-End Max, Back-End Max) PITI = Principal + Interest + Property Tax + Insurance + HOA ≤ Max Housing Payment

Step 2 - Max Loan Amount from Payment

Available for P&I = PITI Max − Tax/mo − Insurance/mo − HOA/mo Max Loan = Available P&I × [(1+r)ⁿ − 1] / [r × (1+r)ⁿ] Where r = monthly rate, n = term in months (This is the inverse of the payment formula) Max Home Price = Max Loan + Down Payment

PITI Explained

P - Principal: Portion of payment reducing loan balance I - Interest: Portion going to lender as interest T - Taxes: Monthly escrow for property taxes I - Insurance: Monthly escrow for homeowner's insurance + PMI: Private Mortgage Insurance if down < 20% + HOA: Homeowners Association fees (if applicable) Lenders use total PITI (not just P&I) for DTI calculation.

PMI - Private Mortgage Insurance

Required when down payment < 20% of home price. Typical cost: 0.5% – 1.5% of loan amount per year. Example: $350,000 loan ~$146–$438/month PMI PMI is cancelled automatically when LTV reaches 78% (or you can request removal at 80% LTV). Putting 20% down avoids PMI entirely - saving hundreds per month.

Frequently Asked Questions

General guideline: 3–4× your annual gross income is a common home price target. For more precision, use the 28% front-end rule: monthly housing costs (PITI) should not exceed 28% of gross monthly income. Example: $8,000/month gross. 28% = $2,240 max housing payment. At 7% for 30 years with 20% down, $2,240/month supports approximately $335,000 in home price. If you have existing debts, the 36% back-end DTI further limits your housing budget. Use the calculator above for your exact figures.

The 28/36 rule: front-end ratio (28%) - monthly housing costs (PITI: principal + interest + property tax + insurance) should not exceed 28% of gross monthly income. Back-end ratio (36%) - all monthly debt payments combined should not exceed 36% of gross monthly income. The binding constraint is whichever limit is hit first. Many lenders now allow back-end DTI up to 43–50% for strong borrowers with good credit and reserves. The 28/36 rule represents the comfortable target, not the maximum approval.

At 7% rate, 30-year loan, 20% down ($80K). Monthly P&I: approximately $2,129. Plus estimated taxes and insurance (~1.25% annually = $417/month): total housing ≈ $2,546/month. Using the 28% rule: needed gross income = $2,546 ÷ 0.28 = $9,093/month = approximately $109,100/year. With 5% down and PMI (~0.75%): housing payment rises to ~$2,846/month, needing approximately $121,700/year. Higher existing debts reduce buying power further.

DTI (Debt-to-Income ratio) = Monthly debt payments ÷ Gross monthly income. Front-end DTI: housing costs only. Back-end DTI: all debts. Good DTI targets: below 28% front-end and 36% back-end (strong position). 36–43% back-end: acceptable, standard approval territory. 43–50%: stretched, may require compensating factors (high credit score, large down payment, significant cash reserves). Above 50%: very difficult to qualify with most lenders.

Conventional loan: 620+ minimum (740+ for best rates). FHA loan: 580+ with 3.5% down; 500–579 with 10% down. VA loan: no official minimum but most lenders want 620+. USDA loan: 640+. The difference between a 680 and 740 credit score can mean 0.25–0.75% lower interest rate - on a $400,000 loan, that saves $30,000–$90,000 over 30 years. Improve your score before applying by paying down revolving balances below 30% utilisation and checking your credit report for errors.

PMI (Private Mortgage Insurance) is required on conventional loans when down payment is below 20%. It protects the lender if you default. Typical cost: 0.5–1.5% of loan amount per year, most commonly ~0.75%. On a $320,000 loan: approximately $200/month. Under the Homeowners Protection Act, PMI must automatically cancel when your loan balance reaches 78% of the original purchase price. You can request cancellation at 80% LTV. FHA loans have their own MIP which works differently and stays longer for low-down-payment borrowers.

Stretching to 43% DTI means buying more house but with significantly less financial cushion. At 36% back-end DTI, approximately 64% of gross income is unencumbered by debt - room for savings, emergencies, and unexpected costs. At 43%, only 57% remains. At 50%, less than half your gross income is free. The right choice depends on your situation: stability of income, existing emergency fund, other financial goals, and the local market. The calculator shows all three ranges - choose based on your risk tolerance and financial cushion, not just what lenders will approve.

(1) Pay down existing debts - removing a $400/month car payment can increase buying power $40,000–60,000. (2) Increase income - a documented raise or second income source changes the calculation immediately. (3) Improve credit score - moving from 680 to 740+ can reduce rate by 0.25–0.5%. (4) Increase down payment - reduces loan size and eliminates PMI at 20%+. (5) Add a co-borrower - their income is counted in the approval. (6) Choose a 30-year over 15-year term for lower required payment. (7) Reduce DTI by paying off small balances - even eliminating a $100/month credit card minimum helps.

Home Affordability Calculator - How Much House Can You Actually Afford?

Lenders will tell you the maximum amount they'll lend. That number is not what you can afford - it's the ceiling at which your application won't be rejected. What you can comfortably afford is usually 15–25% below that maximum, once you account for property taxes, insurance, maintenance, and keeping enough financial flexibility to handle emergencies, retirement savings, and life changes. This calculator shows you the conservative, comfortable, and maximum ranges so you can make a genuinely informed decision.

Quick example - $9,000/month gross income, $500/month in existing debts, 10% down, 7% rate: 28% front-end maximum = $2,520/month housing. 36% back-end maximum = $3,240 total debt − $500 existing = $2,740 max housing. Binding constraint = $2,520. At 7%, 30 years, 10% down: this supports a home price of approximately $325,000. Conservative target (25% front-end): approximately $290,000.

The 28/36 Rule Explained - And Its Modern Variations

The 28/36 rule has been the standard mortgage qualification guideline for decades:

Front-End Ratio (28%)

Monthly PITI ÷ Gross Monthly Income ≤ 28%
PITI = Principal + Interest + Property Taxes + Insurance
PMI included when down payment is below 20%
HOA fees sometimes included by lenders
28% is the traditional target; 25% is comfortable; 30% is stretched
Example: $8,000/month income × 28% = $2,240 max housing

Back-End Ratio (36%)

All monthly debts ÷ Gross Monthly Income ≤ 36%
Includes: housing + car loans + student loans + credit card minimums
36% is the traditional guideline; 43% is commonly approved
Fannie Mae/Freddie Mac allow up to 45–50% with compensating factors
FHA loans allow up to 50% back-end DTI in some cases
Higher DTI = less financial flexibility for savings and emergencies

What Income Do You Need for Common Home Prices?

Using 7% rate, 30-year loan, 20% down, estimated taxes and insurance (1.5% of home value/year), and the 28% front-end rule:

$250,000 home: P&I ≈ $1,329 + taxes/insurance ≈ $313 = $1,642/month. Min income = $1,642 ÷ 0.28 ≈ $5,864/month = $70,400/year
$350,000 home: P&I ≈ $1,862 + $438 = $2,300/month. Min income ≈ $98,600/year
$500,000 home: P&I ≈ $2,661 + $625 = $3,286/month. Min income ≈ $140,800/year
$750,000 home: P&I ≈ $3,991 + $938 = $4,929/month. Min income ≈ $211,200/year
$1,000,000 home: P&I ≈ $5,322 + $1,250 = $6,572/month. Min income ≈ $281,600/year

With 10% down and PMI (~0.75% annually), add approximately $85–$625/month to housing costs depending on loan size, which raises the income required by 10–15%.

The Hidden Costs That Lenders Don't Count

A mortgage approval is based only on your ability to make the monthly payment - it doesn't account for everything owning a home actually costs. Before buying at your maximum approval amount, budget realistically for:

Maintenance and repairs: Budget 1–2% of home value per year. On a $400,000 home: $4,000–$8,000/year (or $333–$667/month). This is not optional - older homes, larger lots, pools, and aging systems regularly generate unexpected costs.
Utilities: A larger home means higher electricity, gas, water, and waste management bills. Older homes may have much higher heating and cooling costs.
HOA fees: Common in condos, townhomes, and planned communities. Can range from $100 to $1,500+ per month. Some lenders include these in DTI; some don't.
Furnishing and moving: A bigger home requires more furniture. First-time buyers often underestimate this by $5,000–$20,000.
PMI removal timeline: At 20% down, PMI is eliminated from day one. At 5% down, you'll pay PMI for approximately 7–10 years before reaching 20% equity - costing $15,000–$50,000 over the term depending on loan size.

How to Increase Your Home Buying Budget

If the calculator's result is below your goal, these are the levers that increase buying power:

Pay down existing debts - Paying off a $400/month car loan frees up that DTI room and can increase your buying power by $40,000–$60,000 on a moderate income.
Increase income - Even a modest documented pay raise changes the calculation. Lenders use year-to-date pay stubs - a recent raise helps immediately.
Improve credit score - Moving from 680 to 740+ can reduce your rate by 0.25–0.75%, meaningfully affecting the payment.
Increase down payment - More down = smaller loan = lower payment, and eliminates PMI at 20%+.
Add a co-borrower - A co-borrower's income and credit are included in the approval calculation.

How this calculator works, and where the numbers come from

The Home Affordability applies the standard formula for this calculation to the values you enter and updates the result as you type. The calculation itself happens in your browser, and the page explains the method so you can check any result by hand.

Please note: Results are estimates. Lender terms, local taxes and fees vary, so confirm figures with your lender or a qualified adviser.

Sources and further reading

Learn more

Read our guide: How EMI Is Calculated, With a Full Worked Loan Example

Last reviewed: October 6, 2026 by the CalcQube Editorial Team. See our editorial policy for how we build and check calculators, or report an error.