How to use the house affordability calculator
Enter your gross household income (before taxes) and the monthly payments on debts you already have, like car loans, student loans and credit card minimums. Don't count groceries or utilities as debt. Then add your down payment, the cash you have for buying, and the mortgage rate and term you expect.
The more local your costs, the better the answer. Property tax and insurance vary a lot by place and home, so use a listing, tax record or insurance quote when you have one.
- Enter gross annual income, monthly take-home pay and existing monthly debt payments.
- Keep or change the 28% housing and 36% total-debt limits, and add a monthly cap you're comfortable with (or 0 to skip it).
- Enter your down payment, cash available, mortgage rate and loan term.
- Add yearly property tax and insurance, plus monthly mortgage insurance, HOA dues, utilities and maintenance.
- Add closing costs, prepaids, any credits and how many months of reserves you want left over.
- Press Calculate and look at the price, which limit set it, your cash check and the stress scenarios.
Example: $90,000 income and $50,000 down
Picture a household earning $90,000 a year ($7,500 a month gross, $6,000 take-home) with $500 of monthly debt. They have $50,000 to put down and want a 30-year fixed loan at 6.5%. Property tax is $350 a month and insurance $125. They budget $200 for utilities and $250 for maintenance, and don't want to spend more than $2,500 a month on the home in total.
Each limit leaves a different amount for principal and interest. Their own $2,500 cap is the tightest at $1,575, which supports a $249,182 loan. Add the $50,000 down payment and the price ceiling is about $299,182. The 28% rule alone would have allowed about $307,093.
| Limit | Monthly ceiling | Left for principal and interest | Home price it supports |
|---|---|---|---|
| 28% housing ratio | $2,100 | $1,625 | About $307,093 |
| 36% total-debt ratio | $2,700 minus $500 debt | $1,725 | About $322,914 |
| Own $2,500 ownership cap | $2,500 | $1,575 | About $299,182 |
How the affordability math works
Each limit is turned into the most you could pay each month for principal and interest. Tax, insurance, mortgage insurance and HOA dues come off all three. Utilities and maintenance come off only your own cap, because lenders don't count them as debt.
The smallest of the three wins. The calculator converts that payment into a loan amount using the standard mortgage formula, then adds your down payment to get the price.
Gross monthly income = annual gross income / 12Housing limit P&I = income x housing ratio - tax - insurance - mortgage insurance - HOATotal-debt limit P&I = income x total-debt ratio - existing debt - tax - insurance - mortgage insurance - HOAOwn cap P&I = monthly cap - tax - insurance - mortgage insurance - HOA - utilities - maintenanceLoan amount = P&I x (1 - (1 + r)^(-n)) / r, where r = rate / 12Home price = loan amount + down payment
Mortgage qualification: DTI and the 28/36 rule
Lenders look at your debt-to-income ratio, or DTI: monthly debt payments divided by gross monthly income. The 28/36 rule is a common starting point. It keeps housing costs at or below 28% of gross income and all debts, housing included, at or below 36%. In the example, housing comes to 27.33% and total debt to 34%.
The CFPB points out that DTI limits differ by lender and loan type, so treat 28 and 36 as editable assumptions. A lender may approve more than you'd want to spend. That's why the calculator lets you add your own monthly cap, based on take-home pay and the rest of your budget.
Count the full monthly cost of owning
Principal and interest are only part of the bill. The CFPB's home-buying guide says your budget should include property taxes, homeowners insurance, mortgage insurance and any HOA fees. In the example, the lender-style housing payment is $2,050, and the full cost with utilities and maintenance is $2,500.
If your down payment is under 20% and you leave mortgage insurance at zero, the calculator flags it. It won't guess a premium, because the rules differ between conventional, FHA, VA and USDA loans. Get a quote and enter it.
Cash to close and reserves
Your down payment isn't the only cash you need. In the example, 3% closing costs on a $299,182 home come to $8,975.46, plus $2,500 of prepaids and escrow. Cash to close is $61,475.46. Add three months of ownership costs as a reserve ($7,500) and the target is $68,975.46.
With $95,000 available, this household has $26,024.54 to spare. Seller or lender credits only reduce closing costs here, never the down payment. Check every figure against your Loan Estimate.
Stress-test the price
A price that only works if nothing changes is a risky one. The calculator reruns the plan with a higher rate, lower income, more debt, and all three at once. In the example, the combined stress drops the ceiling by about $76,846.
| Scenario | Home price ceiling | Limit that binds |
|---|---|---|
| As entered | $299,182.04 | Own ownership cap |
| Rate 1 point higher (7.5%) | $275,252.76 | Own ownership cap |
| Income 10% lower | $273,868.31 | 28% housing ratio |
| $250 more monthly debt | $283,360.96 | 36% total-debt ratio |
| All three together | $222,336.24 | 36% total-debt ratio |
Limits and when to double-check
This is a planning range, not a loan approval or prequalification. Lenders also look at credit, assets, job history, the property and their own product rules. The calculator uses a fixed rate and the costs you enter, and it doesn't forecast home values, tax reassessments or insurance increases.
- Replace estimated taxes and insurance with figures for the actual home.
- Ask lenders which debts and income they'll count.
- Get a mortgage insurance quote if you're putting down less than 20%.
- Compare Loan Estimates for closing costs, credits and cash to close.
- Consider a HUD-approved housing counselor if you'd like a second opinion.
Sources
These CFPB and HUD pages explain DTI, total monthly payments, mortgage insurance and closing costs.