A house affordability calculator estimates the most you can spend on a home from your income, debts, mortgage rate and down payment. At $7,000 a month, $500 of debts and 6.5%, a 36% DTI supports about $359,586 with $40,000 down.
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How to use the house affordability calculator
- Enter gross monthly income and current monthly debt payments.
- Enter the mortgage rate, loan term and maximum DTI.
- Enter your down payment and read the maximum payment, loan and price.
How the house affordability calculator works
The house affordability calculator starts from a debt-to-income (DTI) limit. It multiplies your gross monthly income by the maximum DTI, subtracts the debt payments you already make, and treats what is left as the most you could pay each month on a mortgage. It then turns that payment into a loan amount with the standard amortization formula and adds your down payment:
- Max payment = income × DTI% − monthly debts
- Max loan = payment × (1 − (1 + r)−n) ÷ r, where r is the monthly rate and n is the number of months
- Affordable price = max loan + down payment
House affordability calculator worked example
With $7,000 a month of gross income, $500 of other debt payments and a 36% DTI limit, the maximum payment is $7,000 × 0.36 − $500 = $2,020. At 6.5% over 30 years that payment supports a loan of about $319,586. Add a $40,000 down payment and the price comes to about $359,586. The table uses a $40,000 down payment and a 30-year term.
| Income / mo | Debts / mo | Rate | Max payment | Max loan | Price |
|---|---|---|---|---|---|
| $5,000 | $400 | 6.5% | $1,400 | $221,495 | $261,495 |
| $7,000 | $500 | 5.5% | $2,020 | $355,766 | $395,766 |
| $7,000 | $500 | 6.5% | $2,020 | $319,586 | $359,586 |
| $7,000 | $500 | 7.5% | $2,020 | $288,896 | $328,896 |
| $8,000 | $0 | 6.5% | $2,880 | $455,647 | $495,647 |
| $10,000 | $800 | 6.5% | $2,800 | $442,990 | $482,990 |
Which DTI limit to use
The CFPB explains that DTI is all monthly debt payments divided by gross monthly income, and many lenders prefer a total ratio of 36% or less, although some loans allow more. Fannie Mae’s Selling Guide sets a 36% maximum for manually underwritten loans, up to 45% with strong credit and reserves, and up to 50% through its automated system. A lower limit leaves room for savings, repairs and other goals.
What the payment does not include
The house affordability calculator splits the payment into principal and interest, property tax, homeowners insurance, HOA dues and mortgage insurance (PMI) when you put down less than 20%. Enter your local tax rate, yearly insurance premium, HOA dues and PMI rate, and the tool finds the highest price whose full payment fits. Lenders count all of these in DTI, so subtract your estimate of them from the maximum payment, or lower the DTI field, to get a more realistic price. Closing costs also come out of your cash, which can reduce the down payment you have left.
How the rate changes the answer
At the same $2,020 payment, moving from 5.5% to 7.5% cuts the loan by about $67,000. A shorter term also lowers the loan, because each payment must repay principal faster. Use the house affordability calculator with a few rates to see your range before you talk to lenders.
Tips
- Use gross income before tax, as lenders do.
- Include car, student loan, card minimums and child support in monthly debts.
- Get a Loan Estimate from several lenders to compare real costs.
Estimates for education only, not financial advice. Your lender’s figures are final.
Ways to raise what you can afford
There are only a few levers. You can pay off or pay down other debts, which frees DTI room dollar for dollar: clearing a $300 car payment adds $300 to the maximum mortgage payment, worth roughly $47,000 of loan at 6.5% over 30 years. You can save a larger down payment, which also may remove mortgage insurance. You can shop for a lower rate, since even a quarter point changes the loan by several thousand dollars. Or you can add a co-borrower whose income counts toward the ratio.
Being able to borrow an amount is not the same as being comfortable paying it. Build a monthly budget that includes the full housing payment, maintenance of about 1% to 2% of the home value a year, utilities and savings for emergencies. If the budget is tight at the price the house affordability calculator shows, aim lower. A smaller loan also leaves more room if rates on other debts rise or income falls.
Loan programs and limits
FHA, VA and USDA loans have their own rules for DTI, down payment and mortgage insurance or funding fees, and some allow higher ratios than conventional loans. Conventional loans also have conforming loan limits that vary by county. Use the house affordability calculator for a first estimate, then confirm the program rules with a lender. A preapproval letter, based on verified income and a credit check, gives sellers more confidence than any online estimate.
Related converters and calculators
Related calculators:
- Mortgage calculator: payments
- Debt-to-income calculator: DTI
- FHA loan calculator: FHA loans
- VA mortgage calculator: VA loans
Building instead of buying? The construction loan calculator estimates interest during the build.
Sources
CFPB: What is a debt-to-income ratio?; Fannie Mae Selling Guide B3-6-02: Debt-to-Income Ratios; CFPB: How do mortgage lenders calculate monthly payments?; CFPB: Loan Estimate explainer.
Formula and method
Max housing payment = income × DTI/100 − debts. Find price P so that PMT(P − down) + P × tax%/12 + insurance/12 + HOA + PMI (when down < 20%: loan × PMI%/12) = max payment (bisection).
DTI-constrained payment including taxes, insurance, HOA and PMI, solved for price. Not an underwriting approval.
Questions about this calculator
What DTI do lenders use?
Many prefer 36% or less; Fannie Mae allows up to 45% or 50% in some cases.
Does it include taxes and insurance?
Yes. Enter the property tax rate, yearly insurance, HOA dues and PMI rate.
Should I use gross or net income?
Gross monthly income, as lenders do.
How does the rate change affordability?
Higher rates mean a smaller loan for the same payment.
Is this a preapproval?
No. Only a lender can preapprove you.
Check the assumptions and units before relying on a result. Financial, tax and health estimates do not replace advice for your individual circumstances.
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