House Affordability Calculator
Calculate how much house you can afford based on your income, debts, and down payment
Annual Household Income
$
Monthly Debt Payments
$
Down Payment Amount
$
Mortgage Interest Rate
%
Loan Term
Credit Score Range
Additional Monthly Expenses (Optional)
$/month
$/month
$/month
Affordability Calculation Method
Your House Affordability Results
Based on your financial situation and local housing market
$350,000
Maximum Affordable Home Price
Based on 28/36 rule with 20% down payment
$1,875
Monthly Payment
Principal, interest, taxes, insurance
$280,000
Loan Amount
After down payment
36%
Debt-to-Income Ratio
Within recommended limits
28%
Housing Expense Ratio
28% of gross monthly income
Monthly Housing Budget Breakdown
Mortgage
60%
Taxes
20%
Insurance
10%
PMI
5%
HOA
8%
Other
2%
Recommended Price Ranges
$300,000 - $350,000
Comfortable Range
25-28% housing expense ratio
$350,000 - $400,000
Moderate Range
28-33% housing expense ratio
$400,000 - $450,000
Stretched Range
33-36% housing expense ratio
What Your Budget Buys in Different Areas
| Metro Area | Average Home Price | Monthly Payment | Size (Sq Ft) | Your Buying Power | Affordability Status |
|---|---|---|---|---|---|
| Midwest Suburb | $280,000 | $1,580 | 2,200 | 125% of Average | Very Affordable |
| Southeast City | $350,000 | $1,875 | 1,800 | 100% of Average | Affordable |
| Northeast Suburb | $450,000 | $2,410 | 1,500 | 78% of Average | Moderate |
| West Coast City | $750,000 | $4,015 | 900 | 47% of Average | Stretched |
| Major Metro (NYC/SF) | $1,200,000 | $6,425 | 600 | 29% of Average | Not Affordable |
Lender Qualification Assessment
✓ Debt-to-Income Ratio
36% (within 43% max limit)
✓ Credit Score
Good (670-739) - qualifies for conventional loan
⚠ Down Payment
5.7% (below 20% ideal) - PMI required
✓ Employment History
Assumed stable (2+ years recommended)
Detailed Monthly Payment Breakdown
| Payment Component | Monthly Amount | Annual Amount | Percentage | Notes |
|---|---|---|---|---|
| Principal & Interest | $1,590 | $19,080 | 84.8% | Based on 5.5% interest, 30-year term |
| Property Taxes | $250 | $3,000 | 13.3% | 1.2% of home value annually |
| Home Insurance | $100 | $1,200 | 5.3% | 0.48% of home value annually |
| PMI (if applicable) | $125 | $1,500 | 6.7% | Required with less than 20% down |
| Total Monthly Payment | $2,065 | $24,780 | 110.1% | Includes all housing costs |
About House Affordability
House affordability refers to how much home you can comfortably buy based on your income, debts, down payment, and other financial factors. Determining an affordable home price involves balancing monthly mortgage payments with other living expenses while maintaining financial stability.
The 28/36 Rule
The most commonly used guideline for mortgage affordability is the 28/36 rule:
- 28% Front-End Ratio: Your monthly housing expenses (mortgage, taxes, insurance, HOA) should not exceed 28% of your gross monthly income
- 36% Back-End Ratio: Your total monthly debt payments (housing + other debts) should not exceed 36% of your gross monthly income
Example: With $85,000 annual income ($7,083 monthly):
- Maximum housing payment: $7,083 × 28% = $1,983/month
- Maximum total debt: $7,083 × 36% = $2,550/month
- Available for other debts: $2,550 - $1,983 = $567/month
Factors Affecting Home Affordability
| Factor | Impact on Affordability | Typical Range | How to Improve |
|---|---|---|---|
| Income | Directly increases buying power | N/A | Increase salary, add second income |
| Down Payment | Higher down = lower loan = lower payments | 3-20%+ | Save aggressively, use windfalls |
| Credit Score | Affects interest rate offered | 300-850 | Pay bills on time, reduce debt |
| Debt-to-Income Ratio | Lower DTI = more borrowing capacity | Up to 43% for most loans | Pay off debts, avoid new debt |
| Interest Rates | Lower rates = lower payments | 3-7%+ | Improve credit, shop lenders |
| Loan Term | Longer term = lower payments but more interest | 15-30 years | Choose based on budget vs. goals |
Types of Mortgage Programs and Their Requirements
| Loan Type | Minimum Down Payment | Minimum Credit Score | Max DTI Ratio | Best For |
|---|---|---|---|---|
| Conventional Loan | 3% (PMI if <20%) | 620 | 43-50% | Borrowers with good credit |
| FHA Loan | 3.5% | 580 (500-579 with 10% down) | 43% (up to 50% with compensating factors) | First-time buyers, lower credit |
| VA Loan | 0% | No minimum (lenders typically require 580+) | 41% (higher with residual income) | Veterans, active military |
| USDA Loan | 0% | 640 | 41% | Rural homebuyers, low-moderate income |
| Jumbo Loan | 10-20%+ | 700+ | 43% | High-value homes (>conforming limits) |
Hidden Costs of Homeownership
When calculating affordability, consider these often-overlooked expenses:
| Cost Category | Monthly Estimate | Annual Estimate | As % of Home Value | Notes |
|---|---|---|---|---|
| Maintenance & Repairs | $200-$500 | $2,400-$6,000 | 1-2% | Roof, HVAC, appliances, etc. |
| Utilities | $200-$600 | $2,400-$7,200 | 0.7-2.1% | Electric, water, gas, trash, internet |
| Home Improvements | $100-$300 | $1,200-$3,600 | 0.3-1% | Updates, renovations, landscaping |
| Property Taxes | $150-$800 | $1,800-$9,600 | 0.5-2.5% | Varies widely by location |
| Home Insurance | $50-$200 | $600-$2,400 | 0.2-0.7% | Required by lenders, varies by risk |
| HOA/Community Fees | $0-$500 | $0-$6,000 | 0-1.7% | Condos, planned communities |
| Total Additional Costs | $700-$2,900 | $8,400-$34,800 | 2.4-9.9% | Beyond mortgage payment |
Rule of Thumb: Budget an additional 25-40% of your mortgage payment for these hidden costs.
How to Improve Your Home Affordability
- Increase Your Down Payment:
- Aim for 20% to avoid PMI (saves 0.5-1% of loan annually)
- Every extra $10,000 down reduces monthly payment by ~$50
- Consider down payment assistance programs
- Improve Your Credit Score:
- Pay all bills on time for 12+ months
- Keep credit card balances below 30% of limits
- Avoid new credit inquiries before applying
- Check and dispute errors on credit reports
- Reduce Your Debt-to-Income Ratio:
- Pay off credit cards and personal loans
- Avoid new debt 6-12 months before buying
- Consider debt consolidation to lower payments
- Increase income through raises or side jobs
- Explore Different Loan Options:
- FHA loans allow lower credit scores and down payments
- VA and USDA loans offer 0% down options
- First-time homebuyer programs often have lower requirements
- Consider adjustable-rate mortgages if planning short-term ownership
- Adjust Your Home Criteria:
- Consider smaller homes or fewer bedrooms
- Look in less expensive neighborhoods or suburbs
- Be open to fixer-uppers (with proper inspection)
- Consider townhomes or condos instead of single-family
Regional Affordability Considerations
Housing affordability varies dramatically by location. Consider these regional factors:
| Region | Median Home Price | Property Tax Rate | Insurance Costs | Salary Needed for $350K Home | Affordability Tips |
|---|---|---|---|---|---|
| Midwest | $250,000 | 1.5-2.5% | Low | $65,000 | Best value, lower cost of living |
| Southeast | $320,000 | 0.5-1.5% | Moderate-High | $75,000 | Lower taxes but higher insurance |
| Northeast | $450,000 | 1.5-2.5% | Moderate | $95,000 | Higher prices, older homes |
| West Coast | $750,000 | 0.7-1.2% | High (fire/earthquake) | $160,000 | Consider inland areas, condos |
| Mountain States | $550,000 | 0.5-1.0% | Moderate | $115,000 | Rapidly appreciating, tourist areas expensive |
Timing Your Home Purchase
Consider these timing factors for optimal affordability:
- Interest Rate Environment: Buy when rates are relatively low (historical average: 7-8%)
- Seasonal Patterns: More inventory in spring/summer, better prices in fall/winter
- Market Conditions: Buyer's market (high inventory) vs. seller's market (low inventory)
- Personal Timing: Stable job, no major life changes planned, adequate savings
- Economic Factors: Consider local job market and economic growth projections
Getting Pre-Approved vs. Pre-Qualified
| Aspect | Pre-Qualification | Pre-Approval |
|---|---|---|
| Process | Basic financial review | Full underwriting review |
| Documentation | Self-reported information | Verified documents (pay stubs, tax returns, etc.) |
| Credit Check | Soft pull (may not affect score) | Hard pull (affects credit score) |
| Strength | Estimate of what you might afford | Commitment to lend specific amount |
| Usefulness | Early planning, understanding options | House hunting, making offers |
| Validity Period | Not time-limited | Typically 60-90 days |
| Seller Perception | Shows you're thinking about buying | Shows you're serious and can close |
Recommendation: Get pre-approved before seriously house hunting. It shows sellers you're a serious buyer and helps you shop within your budget.