How much house can I afford?
Lenders decide how much they will lend mainly from your debt-to-income (DTI) ratio: how much of your gross (pre-tax) monthly income goes to housing and other debts. This house affordability calculator finds the highest home price that fits the DTI limits of the loan type you choose, together with your down payment, closing costs and the full monthly cost of owning the home.
Use Based on income to let the DTI rules decide, or Based on monthly budget if you already know how much you want to spend each month. The chart shows how the monthly cost splits between the mortgage, taxes, insurance, HOA fees and maintenance. To see the payment on a specific home, use the mortgage calculator.
Front-end and back-end ratios
- Front-end ratio — monthly housing costs (mortgage payment, property tax, homeowners insurance, HOA fees and mortgage insurance) divided by gross monthly income.
- Back-end ratio — housing costs plus all other monthly debt payments (car, student and personal loans, credit card minimums) divided by gross monthly income.
The lower of the two limits sets your maximum. Check your current ratios with the debt-to-income ratio calculator.
Limits by loan type
- Conventional loans usually follow the 28/36 rule: housing up to 28% of income and all debts up to 36%. With less than 20% down, private mortgage insurance (PMI) is added.
- FHA loans allow up to 31% front-end and 43% back-end. They charge an upfront mortgage insurance premium of 1.75% of the loan plus a monthly premium (MIP), and allow down payments from 3.5%. See the FHA loan calculator.
- VA loans for eligible veterans and service members look mainly at a 41% back-end ratio, need no down payment and charge a one-time VA funding fee. See the VA mortgage calculator.
- Custom ratios from 10% to 50% let you test a more cautious or a more aggressive budget. Ratios above 43% are very aggressive.
How the affordable home price is calculated
First the calculator finds the most you can spend on housing each month. With the 28/36 rule it is the lower of:
Housing budget = min(28% × monthly income, 36% × monthly income − other debts)
Then it finds the home price whose mortgage payment, property tax and insurance add up to exactly that budget:
Price = housing budget / ((1 − d) × k + (t + i) / 12)
- d — the down payment as a share of the price (20% = 0.2);
- k — the monthly payment per $1 borrowed, from the mortgage payment formula r × (1 + r)n / ((1 + r)n − 1);
- t and i — yearly property tax and insurance as a share of the price.
Example: an income of $100,000 a year is $8,333 a month, so with no other debts the housing budget is 28% × $8,333 = $2,333. At 6.5% for 30 years, k ≈ 0.00632. With 20% down, tax of 1.2% and insurance of 0.5%: Price = $2,333 / (0.8 × 0.00632 + 0.017 / 12) ≈ $360,460. With PMI, an FHA premium or a VA funding fee, its yearly rate divided by 12 is added to k.
How much house can I afford on my salary?
The table uses the 28/36 rule with no other debts, 20% down, a 30-year loan at 6.5%, and property tax of 1.2% and insurance of 0.5% of the price per year. Your own taxes, rate and debts will change the result, so enter them in the calculator above.
| Annual income | Housing budget a month | Home price | Down payment | Mortgage payment |
|---|---|---|---|---|
| $50,000 | $1,167 | $180,230 | $36,046 | $911 |
| $75,000 | $1,750 | $270,345 | $54,069 | $1,367 |
| $100,000 | $2,333 | $360,460 | $72,092 | $1,823 |
| $125,000 | $2,917 | $450,575 | $90,115 | $2,278 |
| $150,000 | $3,500 | $540,690 | $108,138 | $2,734 |
| $200,000 | $4,667 | $720,920 | $144,184 | $3,645 |
The mortgage payment on the $360,460 home is about $1,823 a month, plus taxes and insurance. As a rough rule, at a 6.5% rate the 28/36 rule allows a home of about 3.6 times your annual income with 20% down.
How monthly debts lower what you can afford
Other debts count against the 36% back-end limit. Small debts change nothing, because the 28% housing limit is reached first. Once your debts pass about 8% of your gross income, every extra dollar of debt payments takes a dollar from your housing budget. The same $100,000 income as above:
| Other debts a month | Housing budget a month | Home price |
|---|---|---|
| $0 | $2,333 | $360,460 |
| $500 | $2,333 | $360,460 |
| $1,000 | $2,000 | $308,966 |
| $1,500 | $1,500 | $231,724 |
Paying off a car loan or a credit card before you apply can raise your budget more than a raise would. The debt payoff calculator shows the fastest way to do it.
Down payment and closing costs
A larger down payment means a smaller loan and a lower payment, and 20% down on a conventional loan avoids PMI. Many loans accept less: conventional loans from 3% down, FHA loans from 3.5% and VA loans with nothing down. On top of the down payment, closing costs (estimated here at 3% of the price) are due at closing. The down payment calculator shows how much cash you need for a given price.
Costs beyond the price
After you move in, plan for maintenance and repairs — often 1% to 2% of the home's value per year — as well as utilities. Lenders do not count these, but you will pay them.
How to afford more house
- pay down other debts to lower your back-end ratio;
- save a larger down payment to borrow less and avoid PMI;
- improve your credit score to qualify for a lower rate;
- compare areas with lower property taxes and insurance costs.
Not ready to buy?
If the price you can afford is below what homes cost in your area, renting may make more sense for now. The rent calculator shows how much rent fits your income, and the rent vs. buy calculator compares the two over the years you plan to stay.