Home Affordability Calculator

Determining how much house you can afford depends on far more than just your income. Lenders use the 28/36 rule as a starting guideline: your monthly housing costs (mortgage, taxes, insurance, and HOA) should not exceed 28% of your gross monthly income (front-end DTI), and your total monthly debt payments should stay below 36% of your gross income (back-end DTI). This calculator applies both ratios simultaneously and shows you which one is the binding constraint on your affordability. If your existing debts are high, the back-end ratio will limit you before the front-end ratio does, even if your income alone could support a larger payment.

Hidden Costs of Homeownership

The purchase price is only the beginning. Homeowners should budget for maintenance and repairs (typically 1-2% of the home value per year), property taxes that can vary dramatically by location, homeowners insurance, and potential HOA fees. Utility costs for a house are often higher than an apartment, and you may need to purchase appliances, lawn equipment, and other essentials. A $400,000 home can easily cost $600-$1,200 per month beyond the mortgage payment itself. Failing to account for these expenses is one of the most common mistakes first-time buyers make.

How to Improve Your Buying Power

If the calculator shows a lower maximum home price than you hoped, there are several strategies to improve your buying power. Paying down existing debts directly lowers your back-end DTI and increases how much lenders will approve. Saving a larger down payment reduces the loan amount needed and may eliminate the cost of private mortgage insurance (PMI). Shopping multiple lenders can reveal rate differences of 0.25-0.50%, which translates to thousands of dollars in savings and a higher affordable price. Finally, consider FHA loans if you qualify as a first-time buyer, since they allow lower down payments and higher DTI ratios than conventional loans.