How Much House Can I Afford? Mortgage Affordability Calculator
Estimate the maximum home price and monthly payment you can comfortably handle based on income, debts, and down payment. Works for any income level — the defaults are examples only.
Figuring out how much mortgage you can afford comes down to four levers: income, existing debt, down payment, and the interest rate you qualify for. Lenders apply two ratios — a front-end housing ratio (typically capped near 28% of gross monthly income) and a back-end debt-to-income ratio (often capped at 43% to 45% for conventional loans, or up to 50% for some FHA approvals). For example, a household earning $96,000 a year with $400 in monthly debts and a 6.75% rate on a 30-year loan can usually qualify for a mortgage payment around $2,240 per month.
This calculator runs both ratios for you, then backs into a maximum home price using your rate, term, and down payment. It also estimates property tax, homeowners insurance, and PMI when the down payment is under 20%. Try different scenarios — bumping the down payment from 5% to 20% on a $400,000 home can cut roughly $250 off the monthly payment by eliminating PMI and lowering the loan balance. The income and debt figures you enter are just examples; plug in your own numbers for a personalized estimate.
How it works: Enter your gross annual income, monthly debt payments, available down payment, expected interest rate, and loan term. The calculator applies the 28/36 rule, factors in taxes, insurance, and PMI, then shows the maximum home price and a full monthly payment breakdown.
This is an estimation tool, not a loan approval. Actual underwriting considers credit score, employment history, asset documentation, and property condition. Always get a formal pre-approval before making offers.
Understanding Mortgage Affordability in 2026
Knowing your true affordable price range protects you from becoming house-poor. Lenders will often approve you for more than you should comfortably spend — the goal is to find the number that fits your real life, not just the underwriter's spreadsheet.
Affordable home price by income (6.75% rate, 30-yr, 10% down, $400 debt)
| Annual income | Monthly gross | Max housing (28%) | Estimated max price |
|---|---|---|---|
| $60,000 | $5,000 | $1,400 | $215,000 |
| $80,000 | $6,667 | $1,867 | $290,000 |
| $96,000 | $8,000 | $2,240 | $350,000 |
| $120,000 | $10,000 | $2,800 | $440,000 |
| $150,000 | $12,500 | $3,500 | $555,000 |
| $200,000 | $16,667 | $4,667 | $745,000 |
Impact of interest rate on max price ($96,000 income, $40,000 down, $400 debt)
| Interest rate | Monthly P&I (max) | Loan amount | Max home price |
|---|---|---|---|
| 5.50% | $2,000 | $352,400 | $392,000 |
| 6.00% | $2,000 | $333,500 | $373,000 |
| 6.75% | $2,000 | $308,500 | $348,000 |
| 7.00% | $2,000 | $300,700 | $340,000 |
| 7.50% | $2,000 | $286,000 | $326,000 |
| 8.00% | $2,000 | $272,500 | $312,000 |
The 28/36 Rule Explained
The 28/36 rule is the classic affordability benchmark used by most conventional lenders. The 28% front-end ratio means your total monthly housing payment — principal, interest, property taxes, insurance, and HOA — should not exceed 28% of your gross monthly income. The 36% back-end ratio limits all monthly debt obligations (housing plus car, student, and credit card payments) to 36% of gross income. Many lenders stretch back-end to 43% under qualified mortgage rules, and FHA loans can sometimes hit 50%. A safer rule of thumb: keep total housing at or under 25% of take-home pay to leave room for savings and unexpected costs.
Why Down Payment Matters More Than You Think
A larger down payment does three things at once: it shrinks the loan, reduces interest paid over the life of the mortgage, and — once you cross 20% — eliminates private mortgage insurance (PMI). PMI typically costs 0.5% to 1.5% of the loan amount per year, which on a $360,000 loan adds roughly $150 to $450 monthly. As a guideline, aim for at least 10% down to access better rates, and 20% to remove PMI. However, FHA loans accept 3.5% down, and conventional loans can go as low as 3% for first-time buyers, so don't delay buying just to hit 20%.
How Credit Score Changes Your Buying Power
Lenders use credit score tiers to set interest rates. A jump from a 680 to a 760 FICO can lower your rate by 0.5% to 0.75%, which on a $350,000 loan saves around $150 monthly and over $50,000 in lifetime interest. Conventional loans typically require a 620 minimum, FHA accepts 580 with 3.5% down (or 500 with 10% down), and the best rates kick in at 740+. Rule of thumb: every 20-point credit score increase between 660 and 760 can shave roughly 0.125% to 0.25% off your rate. Pay down revolving balances below 30% utilization at least 60 days before applying.
Property Taxes and Insurance — The Hidden Half
Most buyers focus on principal and interest and forget that taxes and insurance can add 25% to 40% to the monthly payment. Property tax rates vary wildly: New Jersey averages 2.2%, Texas 1.8%, California 0.75%, and Hawaii 0.3%. On a $400,000 home, that's a swing from $1,200 to $7,200 a year. Homeowners insurance averages $100 to $200 monthly nationally but can spike in hurricane, wildfire, and flood zones. Rule of thumb: budget at least 1.5% of home value annually for combined taxes and insurance, more in high-tax states. Always check actual rates for the specific zip code before committing.
Reserves, Closing Costs, and the True Cash Needed
Affordability isn't just monthly payment — you also need cash on hand. Closing costs typically run 2% to 5% of the purchase price, covering origination fees, title insurance, appraisal, and prepaid escrow. On a $350,000 home, expect $7,000 to $17,500 at closing on top of the down payment. Lenders also like to see two to six months of mortgage payments in reserves after closing. A safe target: have your full down payment, plus 4% for closing costs, plus three months of PITI in cash before you start house hunting. Don't drain emergency savings to buy a house.
When Lenders Approve You for Too Much
Pre-approval letters often quote the maximum DTI a lender will accept — not what you should actually spend. Underwriters don't factor in retirement contributions, childcare, commuting, groceries, or lifestyle. A household approved for a $3,000 monthly payment might realistically only afford $2,200 once those line items are honest. A practical test: subtract retirement savings (target 15%), groceries, transportation, childcare, and discretionary spending from take-home pay, and see what's left for housing. If the lender's maximum eats into your savings rate, scale back. House-poor homeowners often cite this gap as their biggest financial regret.
Fixed vs. Adjustable, 15 vs. 30-Year Trade-offs
A 30-year fixed mortgage offers the lowest monthly payment and predictable budgeting but the highest lifetime interest. A 15-year fixed has payments roughly 40% higher but cuts total interest by more than half. ARMs (5/1, 7/1, 10/1) start lower than fixed rates by 0.5% to 1% but reset to market rates after the intro period. Rule of thumb: choose 30-year fixed if you value cash flow flexibility, 15-year if you can comfortably afford the higher payment and want to be mortgage-free faster, and an ARM only if you're confident you'll sell or refinance before the reset.
Stress-Testing Your Number
Before locking in a purchase, stress-test the budget under three scenarios: a one-month income loss, a 25% rise in property taxes or insurance, and a major repair like a $12,000 roof or HVAC replacement. If any of those would force you to miss a payment, the home is likely too expensive. A useful check: after your full PITI payment, you should still be saving at least 10% to 15% of gross income for retirement and have an emergency fund covering three to six months of expenses. If not, target a lower price point or larger down payment.
How This Calculator Works: Methodology & Parameter Explanations
Core formula: maxPayment = min(monthlyIncome × 0.28, monthlyIncome × DTI% − monthlyDebt); maxPrice solves for: P&I + taxes + insurance + PMI = maxPayment, where P&I = loan × r / (1 − (1+r)^−n), r = annualRate/12, n = termYears × 12, loan = price − downPayment.
Parameter explanations
| Input | What it means | Impact on results |
|---|---|---|
| Gross annual income | Pre-tax household income from all wage earners and stable recurring sources (W-2 wages, self-employment, alimony). | Direct multiplier on buying power. Roughly $1,000 of additional monthly income lifts max price by ~$45,000 at 6.75% on a 30-year loan. |
| Monthly debt payments | Minimum required payments for car loans, student loans, credit cards, and other recurring obligations. | Each $100 of monthly debt reduces affordable home price by roughly $15,000 because it eats into back-end DTI capacity. |
| Down payment | Cash you can put toward the purchase at closing, before closing costs and reserves. | Higher down payment increases max price modestly via lower loan need, and dramatically reduces monthly payment by lowering principal and (above 20%) removing PMI. |
| Interest rate | Annual percentage rate you expect to qualify for based on credit, down payment, and market conditions. | Inverse and powerful: a 1% rate increase typically shrinks affordable home price by 10% to 12% for the same monthly budget. |
| Loan term | Number of years over which the loan amortizes — usually 15, 20, or 30. | Longer terms lower monthly payments and increase buying power, but raise total interest paid by tens of thousands of dollars. |
| Property tax rate | Annual property tax as a percentage of assessed home value, varies dramatically by state and county. | Each 0.5% of tax rate reduces affordable price by roughly $25,000–$40,000 because escrowed taxes consume monthly payment budget. |
Assumptions
Income, debt, down payment, and rate values you enter are examples only — any realistic numbers work, and nothing is hard-coded inside the formulas.
Homeowners insurance is estimated at a flat $100/month; actual cost varies by location, coverage, and home value.
PMI is applied at 0.75% of the loan balance per year when down payment is below 20% of home price; lenders may charge between 0.5% and 1.5%.
The calculator uses the lower of the 28% front-end ratio and your chosen back-end DTI cap as the binding constraint.
HOA dues, flood insurance, and special assessments are not included — add them manually as additional monthly debt if applicable.
Closing costs, reserves, and moving expenses are not subtracted from the down payment field — keep cash aside separately.
Parameter meanings
| Input | What it means | Impact on results |
|---|---|---|
| Gross annual income | Pre-tax household earnings | Higher income lifts max payment and max price proportionally |
| Monthly debt payments | Required minimums on loans and cards | Each extra $100/mo cuts affordable price by ~$15,000 |
| Down payment | Cash applied at closing | Reduces loan size and eliminates PMI at 20%+ down |
| Interest rate | Annual mortgage APR | +1% rate ≈ −10% to −12% in buying power |
| Loan term | 15, 20, or 30 years | Longer term lowers payment, raises lifetime interest |
| Property tax rate | Annual tax as % of value | Higher tax states meaningfully reduce affordable price |
| Max DTI ratio | Lender's back-end debt cap | 43% is typical; 50% may apply for FHA, 36% for conservative buyers |