Housing
House Affordability Calculator
Figure out how much house you can actually afford. Enter your income, existing debts, down payment, and current rates — we'll calculate a realistic home price target using the same DTI rules lenders apply.
Housing
House Affordability Calculator
Result
The first question almost every home buyer asks is "how much house can I afford?" — and the honest answer is more complicated than a single number. Lenders will tell you a maximum based on debt-to-income ratios. Financial planners will tell you a smaller, healthier number. Your bank account, lifestyle, and risk tolerance might suggest something different again. This calculator gives you a starting point based on the same rules a mortgage lender will use.
What's happening under the hood
You enter five numbers:
- Gross annual income (combined household, before taxes).
- Existing monthly debts (minimum credit card payments, student loans, car loans, child support).
- Down payment you have ready.
- Interest rate you'd qualify for (check current rates — they move daily).
- Loan term, usually 30 or 15 years.
The calculator works backwards from the lender's DTI ceiling: it figures out the maximum monthly housing payment that keeps your total debt-to-income ratio under 36% (the recommended limit) or 43% (the conventional mortgage ceiling), then translates that monthly payment into a home price using the interest rate, term, and down payment.
The 28/36 rule and what it really means
The traditional benchmark for affordability is the 28/36 rule:
Spend no more than 28% of gross income on housing (PITI: principal, interest, taxes, insurance). Spend no more than 36% of gross income on total debt payments (housing plus everything else).
At a $120,000 household income ($10,000/month gross), 28% means a maximum housing payment of about $2,800. Working backwards through current rates, that supports a home in the $400,000-$500,000 range depending on down payment, taxes, and insurance. This is what most financial planners recommend you aim for.
Lenders typically allow more — many will approve mortgages that push you to 43% back-end DTI. At the same $120,000 income, that's roughly $4,300/month in total debt payments, which could support a home well above $500,000. That ceiling isn't a recommendation — it's just where the lender stops saying yes.
What gets included in "housing costs"
The monthly figure on a mortgage calculator is usually just principal and interest. The lender's real number — and the right one for affordability — includes the full PITI plus more:
- P: Principal (paying down the loan)
- I: Interest (the lender's portion)
- T: Property taxes (typically 1.0-1.3% of home value per year, varies by state)
- I: Homeowners insurance ($1,200-$2,500/year depending on coverage and location)
- PMI: Private mortgage insurance (if down payment is under 20%; typically 0.3-1.5% of loan annually)
- HOA dues, if applicable (can be $100-$1,000+/month for condos and planned communities)
Skipping the last three items is the most common way buyers underestimate true monthly cost. A 10%-down mortgage on a $500,000 condo in a HOA community might add $400-$600/month beyond principal and interest, which can blow up an affordability calculation.
The down payment math
Down payment affects affordability in three ways at once: it directly reduces the loan amount, it determines whether you'll pay PMI, and it affects the interest rate you'll qualify for. Three common down payment levels and their tradeoffs:
- 3-5% down (conventional or FHA): minimum out-of-pocket, but PMI required, and total monthly payment will be highest.
- 10% down: common middle ground; still PMI, but typically a better rate.
- 20% down: no PMI, typically the best rates, and dramatically lower monthly payment. Hard for first-time buyers in expensive markets but worth aiming for.
One nuance: don't drain your entire savings into the down payment. You still need an emergency fund and closing costs (2-5% of the home price), and you'll have surprise expenses in the first year of ownership (some buyers report $5,000-$15,000 in unexpected first-year costs for repairs, furniture, and adjustments).
What this calculator doesn't capture
The DTI math is honest but incomplete. A few things a real affordability assessment should include:
- Childcare costs, which don't appear in DTI but can equal a second mortgage payment.
- Retirement savings. If buying the maximum house means halting 401(k) contributions, the long-term cost is enormous.
- Maintenance reserves. Plan for 1-2% of home value per year in ongoing maintenance, more for older homes.
- Job stability. A 30-year mortgage on a 2-year-old job is a bigger bet than one on a 10-year tenure.
The lender's DTI ceiling exists to limit their default risk, not to ensure you'll be happy with the purchase. Most experienced homeowners suggest aiming 15-30% below the lender's maximum to leave room for the rest of life.
Questions readers ask
How much income do I need to buy a $400,000 house?
Using the 28% rule, you'd want gross monthly income of at least $10,000-$11,000 — roughly $120,000-$130,000 annually — to afford a $400,000 home comfortably at current rates with 10% down. Lenders may approve you on lower income (pushing your DTI higher), but the math gets tight on day-to-day living.
Do I really need 20% down to buy a house?
No. FHA loans require 3.5% down, conventional loans accept 5% down with PMI, and VA loans allow 0% down for eligible veterans. The 20% benchmark exists because it eliminates PMI (saving 0.3-1.5% of the loan annually) and typically qualifies you for the best rates. It's a goal, not a requirement.
What's the 28/36 rule for buying a house?
Spend no more than 28% of gross monthly income on housing (PITI), and no more than 36% of gross monthly income on total debt payments. At $120,000 gross income, that's a max of $2,800/month on housing and $3,600/month on all debt combined. This is the financial planner's threshold; lenders allow higher (up to 43%+) but living near the lender's ceiling is uncomfortable.
What hidden costs come with buying a house?
Closing costs (2-5% of home price), moving costs, immediate repairs and upgrades, furniture for empty rooms, ongoing maintenance (budget 1-2% of home value annually), HOA dues, higher utility bills than rent, and property tax escrow shortages that show up in year 2. Many first-time buyers spend $10,000-$20,000 beyond the down payment in their first year.
Is renting cheaper than buying?
Often yes in the short term (under 5-7 years) and especially in high cost-of-living cities. Buying gains the edge over longer time horizons through equity buildup and rent inflation outpacing fixed mortgage payments. The break-even varies significantly by market — in NYC or SF it might be 10+ years, in cheaper markets 3-5 years.
How much house can $100,000 income afford?
Using the 28% rule with 10% down and current rates around 7%, a $100,000 annual income ($8,333/month gross) supports a monthly housing payment of about $2,333, which translates to a home price in the $300,000-$350,000 range. Push to the lender's 43% back-end DTI ceiling and you might qualify for $450,000+, but most planners would not recommend that.