How to use the Home Affordability Calculator
- 1 Enter your gross yearly income, before tax.
- 2 Enter your other monthly debt payments, such as car and student loans.
- 3 Enter your down payment, the mortgage rate and the loan term.
- 4 Set property tax and insurance as a yearly percentage of the price, then read the price you can afford and the payment breakdown.
Worked example
$100,000 income, $500 of other debts, $40,000 down, 6.5% for 30 years, 1.5% tax and insurance. The housing budget is the lower of 28% ($2,333.33) and 36% minus debts ($2,500), so $2,333.33 a month. That supports a home price of about $341,600, with a loan of about $301,600.
Features
28/36 guideline
Housing up to 28% of gross income and all debts up to 36%, whichever is lower.
Taxes and insurance included
The payment includes an allowance for property tax and homeowners insurance.
Ratios shown
See your housing and total debt-to-income ratios for the suggested price.
When to use it
Before house hunting
Know a sensible price range before you fall in love with a listing.
Saving for a down payment
See how a bigger down payment raises the price you can afford.
Paying off debt first
Clear a car loan and watch the affordable price go up.
Rate shopping
See how a lower rate changes your budget.
Frequently asked questions
What is the 28/36 rule?
A common lender guideline: spend no more than 28% of gross monthly income on housing and no more than 36% on all debts including housing. Some loans allow more.
Is this how much I will be approved for?
Not exactly. Lenders also look at your credit, savings and loan type. The CFPB notes 43% debt-to-income as a common upper limit for many mortgages.
Should I borrow the maximum?
Not necessarily. Leave room for maintenance, utilities, savings and emergencies.
What is not included?
Closing costs, PMI if you put down less than 20%, HOA fees and maintenance. Lower the price to allow for them.
What tax and insurance rate should I use?
Around 1% to 2% of the price a year is a common starting point, but property tax varies widely by state and county.
Does a bigger down payment help?
Yes. Every extra dollar down raises the price you can afford by a dollar, and putting down 20% or more avoids private mortgage insurance on a conventional loan.
How much does my credit score matter?
A higher score usually earns a lower rate, and even half a percentage point lowers the payment enough to raise your affordable price by thousands of dollars.
What about FHA or VA loans?
Government-backed loans can allow higher ratios and smaller down payments. Use this result as a starting point and ask a lender about each loan type.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Reviewed by ToolsUnlocked Team · Last updated