Home Affordability Calculator
See how much home you can comfortably afford based on your income, debts, and a target debt-to-income ratio — then plan your down payment around it.
🇺🇸 United StatesHow this affordability calculator works
Affordability starts with your gross monthly income and a target debt-to-income (DTI) ratio — the share of your income lenders allow to go toward debt. We multiply your income by that DTI percentage to find your total monthly debt capacity, then subtract your existing monthly debts (car payments, student loans, credit cards). Whatever is left is the most you can devote to a housing payment.
From that maximum payment we work backward to a loan amount using the standard amortization formula: loan = M · (1 − (1 + r)⁻ⁿ) / r, where M is the monthly payment, r is your monthly interest rate (APR ÷ 12), and n is the number of payments (years × 12). A lower rate or longer term lets the same payment support a larger loan.
Finally, we add your down payment on top of the loan to get your max home price. This estimate is simplified: the max payment is treated as principal and interest only, so it excludes property taxes, homeowners insurance, and PMI. Because those costs are real, your practical price ceiling is usually a little lower — use our mortgage payment calculator to model the full PITI payment.
Use this as a planning tool to set a realistic search budget. Your actual approval depends on your credit, reserves, employment history, and the rate your lender offers. When you are ready, talk to a licensed loan officer for a true pre-approval.
Affordability questions
It starts from your gross monthly income and a target debt-to-income (DTI) ratio. We take that percentage of your income, subtract your existing monthly debts, and treat what is left as the most you can put toward a housing payment. From that payment we back out a loan amount, then add your down payment to get a max home price.
Many lenders look for a total (back-end) DTI around 36%, while some loan programs allow up to 43% or higher with strong credit and reserves. The 28% option reflects the conservative front-end "housing only" guideline. Choosing a lower DTI gives you a safer, more comfortable budget.
For clarity, the max payment here is treated as principal and interest only. Your real monthly housing cost also includes property taxes, homeowners insurance, and PMI if you put less than 20% down — so the true home price you can afford is usually a bit lower than this number suggests.
Yes. Your down payment is added directly on top of the loan you qualify for, so every extra dollar down raises your max home price dollar-for-dollar. A larger down payment can also help you avoid PMI and reduce your monthly payment.
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