Home Affordability Calculator
Estimate the home price your budget can support before you start comparing listings. The calculator turns gross income, existing monthly debts, down payment, mortgage rate, loan term and a monthly tax plus insurance estimate into a maximum loan amount and purchase price. It is a planning estimate, not a lender approval.
How to estimate an affordable home price
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1
Enter gross household income
Use annual income before tax. Include only income you can document, such as salary, self-employment records or regular benefits.
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2
Add existing monthly debts
Include loans, credit-card minimums, student debt, leases and other recurring payments that reduce borrowing capacity.
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3
Set loan assumptions
Enter your down payment, the mortgage rate you expect to receive and the repayment term you want to test.
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4
Estimate housing extras
Add a monthly allowance for property tax, insurance, mortgage insurance, building charges or other local ownership costs.
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5
Read the result conservatively
Compare the monthly budget, maximum PITI, loan amount and purchase price, then leave room for closing costs and cash reserves.
What the affordability result means
Lenders look at more than one number, but the core affordability check is usually a debt-to-income ratio (DTI): how much of your gross monthly income is already committed to debt and the new housing payment.
| Input | How the calculator uses it |
|---|---|
| Gross income | Converts annual income to gross monthly income |
| Existing monthly debt | Subtracts debt payments before sizing the housing payment |
| Max DTI | Caps total monthly debt as a percentage of gross income |
| Tax plus insurance | Reserves part of the housing budget for ownership costs |
| Rate and term | Converts the remaining payment into a loan amount |
| Down payment | Adds cash down to the estimated loan amount |
Calculation flow
- Total monthly debt budget = gross monthly income × DTI limit
- Maximum PITI = total debt budget − existing monthly debt
- Principal and interest budget = maximum PITI − estimated tax plus insurance
- Loan amount = the mortgage supported by that payment, rate and term
- Home price = loan amount + down payment
PITI means principal, interest, taxes and insurance. In some markets you may also need to include mortgage insurance, service charges, building fees, ground rent or homeowners association dues in the same monthly allowance.
Worked example
Suppose a household earns $90,000 per year, pays $400 per month toward other debts, has $40,000 saved for a down payment, uses a 36% DTI limit, estimates $350 per month for tax and insurance, and tests a 30-year loan at 6.5%.
- Gross monthly income: $7,500
- Total debt budget at 36%: $2,700
- Maximum PITI after existing debt: $2,300
- Principal and interest budget after tax plus insurance: $1,950
- Estimated loan amount: about $308,000
- Estimated purchase price with $40,000 down: about $348,000
Use the same currency throughout. If you are buying outside the US, replace the tax, insurance and fee estimate with local costs and use the mortgage rate quoted in your market.
Costs to keep outside the maximum
- Closing costs, taxes and legal or notary fees.
- Moving, inspections, repairs, appliances and furnishing.
- Cash reserves after closing. Many lenders and advisers prefer several months of housing payments in savings.
- Interest-rate changes before you lock a mortgage offer.
Frequently Asked Questions
No. It is a planning estimate. A lender will also review credit history, assets, employment stability, property type, local rules and the exact mortgage product.
A 28-36% range is a conservative planning guardrail in many US examples, while some lenders allow higher ratios for strong applications. Use the limit your broker or lender gives you when you have one.
Include recurring obligations that appear in underwriting or credit checks: loan payments, card minimums, student debt, leases, alimony or other fixed monthly commitments.
Use the best monthly estimate for your target property: property tax, home insurance, mortgage insurance, service charges, condo fees or local equivalents. If you are unsure, use a higher number so the result stays cautious.
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