How Much House Can You Afford?
How much house can you afford?
The question isn't what a lender will approve you for — it's what you can actually afford without financial stress. These are two very different numbers, and most first-time buyers find out the hard way. Lenders use two debt-to-income ratios: the front-end ratio (housing costs ÷ gross income, target under 28%) and the back-end ratio (all monthly debt ÷ gross income, target under 36%). Getting approved means meeting these thresholds. But "approved" and "comfortable" are different standards — lender maximums assume everything goes right, with no job loss, no emergency repairs, no car breakdown. This calculator applies the same DTI formulas lenders use but frames the result around your real financial situation. It shows you the home price that keeps your monthly obligation at a sustainable level given your income, existing debts, down payment, and current interest rates. The result has two important numbers: the lender's maximum (what you can get approved for) and the conservative target (what you can afford without sacrificing savings, flexibility, and peace of mind). They're rarely the same.
- ·Uses the conventional lending 28% front-end and 36% back-end DTI thresholds
- ·Estimates property tax at 1.2% annually; enter your county's actual rate for accuracy
- ·Estimates homeowner's insurance at $1,500/year — varies widely by location and home age
- ·PMI assumed at 0.7% annually if down payment is less than 20%
- ·Does not account for HOA fees, which can add $100–$1,000+/month in some communities
Front-end DTI = (Monthly housing cost) ÷ (Gross monthly income) ≤ 28% Back-end DTI = (Monthly housing cost + all other debt payments) ÷ (Gross monthly income) ≤ 36% The calculator works backwards from both thresholds to find the maximum monthly housing payment, then converts that payment to a home price using the mortgage formula. Maximum housing payment from front-end: Gross monthly income × 0.28 Maximum housing payment from back-end: (Gross monthly income × 0.36) – existing monthly debt payments The lower of these two is your effective maximum payment. From there: subtract estimated taxes, insurance, and PMI to get maximum P&I, then solve for loan amount using the amortization formula.
- →Before you start touring homes — know your real ceiling before you fall in love with something out of range
- →After getting pre-qualified — pressure-test the lender's number against your actual monthly budget
- →When comparing different down payment scenarios — see how $20K or $40K extra changes what you can afford
- →When rates change significantly — a 1% rate increase typically drops affordability by 8–10%
- →Before applying for a mortgage — see whether paying off one debt dramatically improves your position
Example 1: Single earner with moderate debt
Inputs: Income: $90,000/yr ($7,500/mo gross) · Existing debt: $650/mo (car + student loan) · Down: $60,000 · Rate: 7.0% · Term: 30 yr
Result: Max payment (front-end): $2,100 · Max payment (back-end): $2,050 · Binding constraint: back-end · Maximum home price: ~$340,000
The existing $650/month in debt is eating into buying power. Pay off the car loan first and the maximum home price jumps to approximately $395,000 — a $55,000 swing from eliminating one debt.
Example 2: Dual income, no existing debt
Inputs: Combined income: $145,000/yr ($12,083/mo gross) · Existing debt: $0 · Down: $85,000 · Rate: 7.0% · Term: 30 yr
Result: Max payment (front-end): $3,383 · Max payment (back-end): $4,350 · Binding constraint: front-end · Maximum home price: ~$510,000 · Conservative target: ~$430,000
No debt means maximum buying power. The conservative target (20–25% of gross) is $430,000 — $80,000 below the lender maximum. Buying at the conservative target leaves $500+/month for retirement contributions and emergencies.
🏠 House Affordability Calculator
Max Home Price · Monthly Breakdown · Rate & Down Payment Scenarios · Equity Build
Results update in real time. Based on the 28/36 DTI rule used by conventional lenders.
Car, student, credit card mins
About This Calculator
This house affordability calculator finds your maximum home price in real time using the 28/36 DTI rule. Budget = min(income/12 × 0.28, income/12 × 0.36 − debts). Max home price solved via 60-iteration binary search: price where PITI equals budget exactly. Monthly PITI = calcMonthlyPI(loan, rate, term) + price × tax/100/12 + insurance/12 + pmi if down < 20%. Score: housing ratio ≤25% = 90, ≤28% = 75, ≤32% = 60, ≤36% = 45, else 30. Tiers: Comfortably Affordable (≥85), Affordable (≥70), Borderline (≥55), Stretching (≥40), Overextended. All 8 inputs update in real time.
The Overview tab renders a donut PieChart of PITI components (P&I in tier accent, tax amber, insurance indigo, PMI red if applicable) with side legend plus % and dollar amounts, then a stacked AreaChart showing equity growth (accent gradient) vs remaining loan balance (indigo dashed) over the loan term assuming 3%/yr home appreciation, then a cash flow summary table. The Breakdown tab renders a BarChart of max home price at 5 down payment levels (5-25%, amber if PMI required/green if not/accent for current), plus a BarChart of max home price at 5 rate scenarios (green for lower rates/red for higher/accent for current), each with LabelList dollar labels and a ReferenceLine at current price. The Scenarios tab renders a rate sensitivity table (all 5 rates with monthly payment, buying power delta, total interest) plus the affordability tier scale card with current tier highlighted. The Insights tab shows 4 key insights (full affordability summary, PITI breakdown with total interest, DTI check with remaining income, rate and debt strategy) plus how-to-qualify tips and a tier-specific action recommendation.
Results are estimates only and do not constitute financial, tax, or legal advice. Always consult a qualified professional before making financial decisions.
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- ✕Treating the lender's pre-approval amount as your budget — it's a maximum, not a recommendation
- ✕Forgetting to include HOA fees in the monthly payment estimate when shopping condos or planned communities
- ✕Not accounting for how a rate increase of 0.5% reduces affordability by roughly 5%
- ✕Running this calculation once and not re-running when interest rates change significantly
- ✕Ignoring the opportunity cost of a very large down payment if it depletes your emergency fund
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