How Much House Can I Afford? Calculator
How this home affordability calculator works
Lenders often look at two ratios. The front-end ratio says housing costs should stay under about 28% of your gross monthly income. The back-end ratio says housing plus all other debt payments should stay under about 36%. This calculator uses whichever limit is lower, subtracts your estimated taxes and insurance, and works out the loan that payment can support at your interest rate. Adding your down payment gives the estimated home price.
Example: how much house can I afford on $60,000?
With a $60,000 income, $400 in monthly debts, a $20,000 down payment, a 6.5% rate on a 30-year loan and $400 a month for taxes and insurance, the maximum housing payment is $1,400. After taxes and insurance, about $1,000 goes to the loan, which supports a loan of roughly $158,000 and a home price near $178,000.
What can change the answer
A bigger down payment, lower debts or a lower interest rate all raise the price you can afford. Some lenders approve higher ratios, but a bigger payment leaves less room for repairs, savings and everything else. Remember closing costs, moving costs and maintenance, which are not included here.
Frequently asked questions
Is this the amount a lender will approve?
No. It is an estimate based on common guidelines. Lenders also look at your credit score, savings and employment history, so get a pre-approval for an exact number.
Should I spend the maximum?
Not necessarily. Compare the payment with your budget using the 50/30/20 budget calculator, and check the exact payment with the mortgage calculator.
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Estimates for education only, not financial advice.