Home Affordability Calculator
Find out exactly how much house you can afford based on your income, monthly debts, down payment, and local costs. Uses the 28/36 rule with a 4-year cost projection.
How Much Home Can You Afford?
Buying a home is the biggest financial decision most people make. Understanding how much you can truly afford — beyond just the mortgage payment — is critical to avoiding becoming house poor. This calculator uses the standard 28/36 debt-to-income rule that most lenders follow.
The 28/36 Rule Explained
The front-end ratio (28%) means your total monthly housing costs — mortgage principal and interest, property taxes, homeowners insurance, PMI, and HOA fees — should not exceed 28% of your gross monthly income. The back-end ratio (36%) means your total debt payments — housing plus car loans, student loans, credit cards, alimony, etc. — should not exceed 36% of your gross monthly income. Some loan programs allow higher back-end ratios up to 43% or even 50%.
Beyond the Mortgage: The True Cost of Homeownership
Your monthly housing payment includes more than just the mortgage: Property taxes vary dramatically by state — New Jersey averages 2.2% of home value, while Hawaii averages 0.3%. Homeowners insurance costs $800–$1,500/year on average, more in disaster-prone areas. PMI (0.3–1.5% of loan annually) is required if your down payment is under 20%. HOA fees can range from $50–$500+/month. Maintenance typically costs 1–2% of home value annually — a ~$2,500–$8,000/year expense many first-time buyers overlook.
4-Year Cost Projection
This calculator shows your costs over the first 4 years of homeownership. Each year's projection accounts for: gradual principal paydown (your balance decreases as you build equity), PMI removal once you reach 20% equity (saving 0.3–1.5% of the loan annually), and ongoing tax and insurance costs. Use the tabs above to see how your equity grows and your costs change each year.
Down Payment Strategies
The ideal down payment is 20% to avoid PMI, but many programs allow much less: FHA loans require 3.5% (with MIP for the life of the loan), conventional loans 3–5% (with PMI), VA and USDA loans 0% for qualifying borrowers. The median US down payment is about 13%. A larger down payment means lower monthly payments and less interest over the life of the loan.
Frequently Asked Questions
With a $100,000 salary ($8,333/month), $500 in monthly debts, 20% down, and a 6.5% interest rate: you can afford approximately $370,000–$400,000. Your monthly housing payment would be about $2,100–$2,300 (28% of income), and total debt payments about $2,600–$2,800 (36% of income).
PMI (Private Mortgage Insurance) protects the lender if you default and is required when your down payment is under 20%. It costs 0.3–1.5% of the loan amount annually (about $50–$200/month on a $300,000 loan). PMI automatically terminates when your loan balance reaches 78% of the original home value, or you can request cancellation at 80%. Making extra payments accelerates PMI removal.
Most conventional lenders want a front-end ratio under 28% and a back-end ratio under 36%. FHA loans allow up to 31% front-end and 43% back-end. USDA loans allow 29% front-end and 41% back-end. Some portfolio lenders accept back-end ratios up to 50% with compensating factors like excellent credit or large reserves.
Property taxes vary drastically by location and directly impact your monthly payment and how much you can afford. In New Jersey (2.2% effective rate), a $400,000 home costs about $733/month in taxes alone. In Hawaii (0.3%), the same home costs about $100/month in taxes. This $633/month difference translates to roughly $80,000–$100,000 in buying power.
Pre-qualification is an informal estimate based on self-reported information — quick but not verified. Pre-approval is a conditional commitment from a lender after verifying your income, assets, and credit — it carries more weight with sellers and tells you exactly how much you can borrow. Pre-approval typically requires a credit check and documentation of income and assets.
Buying makes sense if you plan to stay in the home for at least 5–7 years (to recoup transaction costs of 2–5% for closing and 5–6% for selling commission). Renting is better if you value flexibility, have limited savings, or live in a market where price-to-rent ratios are high. The rent vs. buy decision depends on your local market, how long you'll stay, and your ability to handle maintenance costs.