Home Affordability Calculator
The Home Affordability Calculator estimates the maximum home price you can afford based on your income, monthly debts, down payment, and mortgage terms, using the lender 28/36 debt-to-income rule that underwriters rely on for pre-approval. Under the hood, the calculator solves for the exact home price where principal & interest, property tax, and insurance combined would consume your entire monthly housing budget — so the "maximum home price" shown is a genuine ceiling under your inputs, not a rounded rule-of-thumb multiple of income. Because property tax scales with home price, a higher tax rate reduces the affordable price by more than just its own dollar cost, since it competes with the loan itself for the same fixed monthly budget. If your existing monthly debts already consume your entire debt-to-income limit, the calculator reports $0 in affordable housing budget rather than a negative number, signaling that debt reduction or income growth is needed before qualifying for any mortgage payment at your chosen DTI limit.
How This Tool Works
Enter your gross annual income, monthly debt payments, down payment, and mortgage rate/term. Adjust the property tax rate and debt-to-income limit if you like, then see your maximum home price and estimated monthly payment.
Formula & Method
Lenders cap housing costs at about 28% of gross monthly income (front-end) and total debts at about 36% (back-end). We take the tighter limit, subtract taxes, insurance, and HOA, and back out the largest home price whose principal & interest fits the remaining budget.
Example Calculation
On a $96,000 annual income ($8,000/month gross), $300 in existing monthly debts, a $30,000 down payment, and a 30-year loan at 6% with 1.2% annual property tax and $1,200/year insurance: the front-end (28%) cap allows $8,000 × 28% = $2,240/month, while the back-end (36%) cap allows ($8,000 × 36%) − $300 = $2,580/month. Since $2,240 is tighter, that's the housing budget used. Solving for the home price whose principal & interest, tax, and insurance fit inside that $2,240 gives a maximum home price of about $331,622 — a loan amount of $331,622 − $30,000 = $301,622, with principal & interest of about $1,808.38/month, property tax of $331,622 × 1.2% ÷ 12 ≈ $331.62/month, and $100/month insurance. Added together: $1,808.38 + $331.62 + $100 = $2,240.00, exactly matching the housing budget used to solve for the price.
Frequently Asked Questions
What is the 28/36 rule?+
A common lender guideline: keep housing costs at or below 28% of your gross monthly income, and total monthly debts (housing plus car, student loans, and credit cards) at or below 36%. This calculator uses whichever limit is tighter.
Is this the same as getting pre-approved?+
No. This is a fast estimate based on income and debts. A real pre-approval also weighs your credit score, employment history, assets, and the specific loan program, so your approved amount may be higher or lower.
Should I borrow the maximum I can afford?+
Not necessarily. The maximum is what a lender may allow, not what is comfortable. Leave room for savings, emergencies, maintenance, and lifestyle — many buyers choose a payment below their ceiling.
How does my down payment change what I can afford?+
A larger down payment lowers your loan amount and monthly payment, so you can afford a higher-priced home for the same monthly budget — and a down payment of 20% or more helps you avoid private mortgage insurance.
What happens if my existing monthly debts already use up my entire debt-to-income limit?+
The calculator shows $0 in room for housing rather than a negative number. That means, at your chosen debt-to-income limit, you'd need to pay down existing debt or increase income before qualifying for any mortgage payment at all.
Does switching the debt-to-income limit to 43% or 50% always increase what I can afford?+
Only if the 36% back-end limit was the tighter constraint for your numbers. The front-end 28% housing cap is fixed no matter which DTI option you pick, so if your existing debts are low, raising the DTI limit often won't change your maximum home price at all, since the 28% cap was already the binding limit.
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<a href="https://everyfix.net/tools/home-affordability-calculator/">Home Affordability Calculator</a> by <a href="https://everyfix.net">EveryFix</a>Related Tools
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