Find out how much house you can afford based on your income, debts, down payment, and today’s mortgage rates.
Income & Debts
Loan Details
Additional Costs
Debt-to-Income Ratio Check
How Home Affordability Is Calculated
Lenders use two key debt-to-income (DTI) ratios to determine how much mortgage you qualify for:
- Front-end DTI (28%): Your monthly housing costs (principal, interest, taxes, insurance) should not exceed 28% of your gross monthly income.
- Back-end DTI (36%): All monthly debt payments combined (housing + car + student loans + credit cards) should not exceed 36% of gross monthly income.
- PMI: If your down payment is less than 20%, most lenders require Private Mortgage Insurance — typically 0.5–1.5% of the loan per year.
- FHA loans allow higher DTI ratios (31/43) with as little as 3.5% down, but require mortgage insurance premiums.
Results are estimates for planning purposes. Your actual loan offer will depend on your credit score, employment history, and the lender’s criteria. Always get pre-approved before making an offer.
How to Use the Home Affordability Calculator
- Enter your gross annual income — Input your total household income before taxes. Include all income sources: salary, self-employment income, rental income, and any other regular income you can document for a lender.
- Enter your monthly debt payments — Include all recurring debt obligations: minimum credit card payments, auto loan payments, student loan payments, and any other monthly debt. Do not include current rent or utilities.
- Enter your down payment amount — Input the total cash you have available for a down payment. A larger down payment reduces your loan amount, eliminates or reduces PMI, and lowers your monthly payment.
- Enter the current mortgage interest rate — Input the prevailing 30-year fixed mortgage rate. Check current rates from a lender or mortgage aggregator site for the most accurate estimate.
- Enter your loan term — Select 15-year or 30-year. A 15-year mortgage carries a lower interest rate but higher monthly payment; a 30-year mortgage has a lower payment but higher total interest cost.
- Click Calculate — The tool displays the maximum home price you can afford based on standard lending guidelines, your estimated monthly payment, and a breakdown of principal, interest, taxes, and insurance.
How the Home Affordability Calculator Works
Buying a home is the largest financial transaction most people will make in their lifetime, and the question of how much house you can afford has two different answers: what a lender will approve you for, and what you can actually afford without straining your financial life. These numbers are not always the same. This calculator uses standard lending guidelines to estimate both — giving you a realistic picture before you start shopping so you don’t fall in love with a home that’s outside a sustainable budget.
The 28/36 Rule
The 28/36 rule is the foundational guideline lenders use to assess mortgage affordability. It states that your monthly housing costs — principal, interest, property taxes, and homeowners insurance, collectively known as PITI — should not exceed 28% of your gross monthly income. Your total monthly debt obligations, including the housing payment, should not exceed 36% of gross monthly income. These ratios are known as the front-end and back-end debt-to-income ratios respectively. A household earning $8,000 per month gross should target a maximum housing payment of $2,240 (28%) and total monthly debt including housing of no more than $2,880 (36%). Conventional lenders typically approve loans up to a 43–45% back-end DTI, but borrowing to that limit leaves little financial margin.
How Lenders Calculate Debt-to-Income Ratio
Lenders calculate your debt-to-income ratio by dividing your total monthly debt obligations by your gross monthly income. The DTI calculation includes the proposed new mortgage payment plus all existing recurring debt — auto loans, student loans, minimum credit card payments, and any other installment or revolving debt. It does not include utilities, cell phone bills, insurance premiums, or living expenses. A DTI below 36% is considered strong. Between 36% and 43% is acceptable to most conventional lenders. Above 43% triggers additional scrutiny and may disqualify you from conventional financing, though FHA loans allow DTIs up to 50% in some cases.
The True Cost of Homeownership Beyond the Mortgage
First-time buyers frequently underestimate the full monthly cost of homeownership by focusing on the mortgage payment alone. The complete monthly housing cost includes property taxes, which average 1.0–1.5% of home value annually depending on location; homeowners insurance, which averages $100–$200 per month for a typical single-family home; private mortgage insurance (PMI) if your down payment is less than 20%, which typically costs 0.5–1.5% of the loan amount annually; and HOA fees if applicable, which range from $100 to over $1,000 per month in some communities. Beyond monthly costs, homeowners should budget 1–2% of the home’s value annually for maintenance and repairs — a $400,000 home requires $4,000–$8,000 per year on average for upkeep.
Down Payment: How Much Is Enough?
The conventional wisdom is that a 20% down payment is required to buy a home — but this is a myth. Conventional loans are available with as little as 3–5% down, FHA loans require 3.5%, and VA and USDA loans are available with zero down payment for qualifying buyers. The tradeoff for a smaller down payment is PMI, a higher loan balance, and a larger monthly payment. The financial case for 20% down is real — it eliminates PMI, reduces the loan amount, and signals financial stability to lenders — but it shouldn’t be treated as a hard prerequisite that prevents buying entirely. The right down payment is the one that gets you into a home with a sustainable payment without depleting your emergency fund or retirement savings.
Fixed vs. Adjustable Rate Mortgages
A fixed-rate mortgage locks in your interest rate for the life of the loan — your principal and interest payment never changes, providing budget certainty over decades. An adjustable-rate mortgage (ARM) starts with a fixed rate for an initial period — typically 5, 7, or 10 years — then adjusts annually based on a benchmark index plus a margin. ARMs carry initial rates lower than fixed-rate mortgages, which can meaningfully reduce early payments, but they introduce interest rate risk when the adjustment period begins. ARMs are most appropriate for buyers who are confident they will sell or refinance before the adjustment period starts. For buyers planning to stay in a home long-term, a fixed-rate mortgage provides the predictability that supports sound long-term financial planning.
How Credit Score Affects Mortgage Rate and Affordability
Your credit score is one of the most consequential variables in mortgage affordability because it directly determines the interest rate you’re offered. A borrower with a 760+ credit score may qualify for a rate 0.5–1.0 percentage points lower than a borrower with a 680 score on the same loan. On a $350,000 mortgage, a 1% rate difference changes the monthly payment by approximately $200 and the total interest paid over 30 years by over $70,000. Improving your credit score before applying for a mortgage — by paying down revolving balances, avoiding new credit applications, and correcting any errors on your credit report — is one of the highest-return preparatory actions a prospective homebuyer can take.
Home Affordability by Income and Down Payment (2025)
The following table shows estimated maximum affordable home prices at various income levels and down payment amounts, based on the 28% front-end DTI guideline and a 7.0% 30-year fixed mortgage rate with no existing debt obligations.
| Annual Income | 5% Down Payment | 10% Down Payment | 20% Down Payment | Max Monthly PITI |
|---|---|---|---|---|
| $60,000 | ~$195,000 | ~$210,000 | ~$235,000 | $1,400 |
| $80,000 | ~$260,000 | ~$280,000 | ~$315,000 | $1,867 |
| $100,000 | ~$325,000 | ~$350,000 | ~$390,000 | $2,333 |
| $125,000 | ~$405,000 | ~$435,000 | ~$490,000 | $2,917 |
| $150,000 | ~$485,000 | ~$525,000 | ~$585,000 | $3,500 |
| $200,000 | ~$650,000 | ~$700,000 | ~$780,000 | $4,667 |
Estimates assume 7.0% 30-year fixed rate, 1.2% annual property tax, $150/month homeowners insurance, and no existing monthly debt. Actual affordability will vary based on individual financial profile and lender guidelines.
Frequently Asked Questions
How much house can I afford on a $75,000 salary?
Using the 28% front-end DTI guideline, a $75,000 annual salary produces a gross monthly income of $6,250, supporting a maximum housing payment of approximately $1,750 per month. At a 7.0% 30-year fixed rate with a 10% down payment and typical property tax and insurance costs, this translates to an affordable home price in the range of $260,000–$280,000. Your actual affordability may be higher or lower depending on your existing debt obligations, credit score, local property tax rates, and the specific loan program you qualify for. Always get a mortgage pre-approval to understand your specific borrowing capacity before beginning your home search.
What is PMI and how do I avoid it?
Private mortgage insurance is a monthly premium required by lenders on conventional loans when the down payment is less than 20% of the purchase price. PMI protects the lender — not the buyer — against default risk. It typically costs 0.5–1.5% of the loan amount annually, or roughly $100–$300 per month on a $300,000 loan. PMI can be avoided by making a 20% down payment, or eliminated once your loan-to-value ratio reaches 80% through a combination of payments and home appreciation — at which point you can request cancellation from your lender. Some lenders offer lender-paid PMI in exchange for a slightly higher interest rate, which may or may not be more cost-effective depending on how long you hold the loan.
What credit score do I need to buy a house?
Minimum credit score requirements vary by loan type. Conventional loans typically require a minimum score of 620, though the best rates go to borrowers with scores of 740 or higher. FHA loans are available to borrowers with scores as low as 580 with a 3.5% down payment, or as low as 500 with 10% down. VA loans have no official minimum score requirement, though most VA lenders look for at least 620. A higher credit score doesn’t just improve your approval odds — it directly lowers your interest rate, which reduces your monthly payment and total interest cost over the life of the loan. If your score is below 700, spending six to twelve months improving it before applying can save you tens of thousands of dollars.
How much do I need for closing costs?
Closing costs typically run 2–5% of the loan amount and are due at settlement in addition to your down payment. On a $350,000 home, closing costs can range from $7,000 to $17,500. They include lender fees, title insurance, appraisal fees, attorney fees where required, prepaid property taxes, and homeowners insurance. Many buyers are caught off guard by closing costs because they focus exclusively on saving for the down payment. Budget for both simultaneously. In some market conditions, you may be able to negotiate seller concessions to cover a portion of closing costs, or roll some costs into the loan through a slightly higher interest rate — though both strategies have tradeoffs worth understanding.
Is it better to buy a less expensive home or wait and save a larger down payment?
The right answer depends on your local market, current mortgage rates, and how long you plan to stay in the home. In appreciating markets, waiting to save a larger down payment can cost more in price appreciation than it saves in PMI and interest. In flat or declining markets, waiting preserves flexibility. A useful framework: if you plan to stay in the home at least five to seven years, have a stable income, and can afford the payment comfortably without depleting savings, buying sooner with a smaller down payment is often defensible. If the payment would stretch your budget, your job situation is uncertain, or you anticipate needing to move within a few years, waiting and saving more is the more conservative approach.
Should I get pre-qualified or pre-approved before house hunting?
Pre-approval — not just pre-qualification. Pre-qualification is an informal estimate based on self-reported information and carries little weight with sellers. Pre-approval involves a formal application, credit check, income verification, and asset documentation, producing a conditional commitment from a lender for a specific loan amount. In competitive markets, sellers frequently require a pre-approval letter before accepting an offer, and buyers without one are at a significant disadvantage. Pre-approval also gives you a precise budget ceiling based on your actual financial profile — more reliable than any online calculator — and identifies any credit or documentation issues before you’re under contract on a home.
Tips for Buying a Home Within Your Means
- Use the lender’s maximum as a ceiling, not a target. Mortgage lenders approve borrowers for the maximum they qualify for based on income and debt ratios — not the payment that leaves room for retirement savings, home maintenance, and financial emergencies. Being approved for a $450,000 mortgage doesn’t mean a $450,000 home is the right choice for your budget. Run your own affordability analysis based on total monthly housing cost as a percentage of take-home pay — not gross income — and leave meaningful room for savings and life expenses.
- Budget 1–2% of home value annually for maintenance. Homeownership comes with a maintenance cost that renters don’t face — roof repairs, HVAC servicing, appliance replacement, plumbing issues, and general upkeep. On a $350,000 home, that’s $3,500–$7,000 per year, or $290–$580 per month, that should be factored into your affordability calculation and set aside in a dedicated home maintenance fund. Buyers who don’t budget for maintenance often end up financing emergency repairs on credit cards, turning predictable costs into high-interest debt.
- Shop at least three lenders before committing. Mortgage rates and fees vary more than most buyers realize across lenders. A 0.25% rate difference on a $350,000 loan changes the monthly payment by roughly $55 and the total interest cost over 30 years by nearly $20,000. Comparing offers from at least three lenders — a national bank, a regional bank or credit union, and a mortgage broker — takes a few hours and can produce thousands of dollars in savings. Multiple mortgage inquiries within a 45-day window are treated as a single inquiry for credit scoring purposes, so rate shopping doesn’t hurt your score.
- Don’t drain your savings for the down payment. Arriving at closing with the minimum cash required and no reserves is a precarious position. Lenders look more favorably on borrowers with post-closing reserves — typically two to six months of mortgage payments in accessible savings. More importantly, a home purchase almost always generates immediate expenses: moving costs, minor repairs, new appliances, and furnishings. Entering homeownership with no liquid savings means the first unexpected expense goes on a credit card. Maintain at least three months of expenses in savings after closing, even if it means a smaller down payment.
- Consider total cost of ownership across neighborhoods. Two homes at the same purchase price in different locations can carry dramatically different total costs due to property tax rates, HOA fees, commute costs, flood insurance requirements, and school district quality if you have children. A $380,000 home in a high property tax municipality with a long commute may cost significantly more per month than a $400,000 home with lower taxes, lower transportation costs, and no HOA. Always compare total monthly cost of ownership — not just mortgage payment and purchase price — when evaluating homes in different locations.