Home Affordability Calculator

How Much House Can You Afford?

Lenders use two key debt-to-income (DTI) ratios to determine how much you can borrow. The front-end ratio (housing ratio) is your total monthly housing cost divided by gross monthly income — lenders typically want this below 28%. The back-end ratio is all monthly debt payments (housing + car + student loans + credit cards) divided by gross income — lenders generally cap this at 36–43%.

Your down payment affects how much you need to finance and whether you'll pay PMI. A 20% down payment eliminates PMI and often qualifies you for better rates. For a $400,000 home, 20% down means financing $320,000; at 10% down you finance $360,000 and pay PMI until you reach 20% equity.

Frequently Asked Questions

• What is a good debt-to-income ratio for a mortgage?
  Most conventional lenders prefer a back-end DTI below 43%. Some programs (FHA, VA) allow up to 50% DTI. A DTI below 36% puts you in strong territory and typically gets you the best rates.
• How much income do I need to buy a $400,000 house?
  At 7% interest, 30-year term, 20% down, the P&I payment is about $2,130/month. At a 28% front-end ratio, you'd need roughly $7,600/month ($91,200/year) gross income. Adding taxes, insurance, and other debts increases the income requirement.
• Does the affordability calculator include property taxes?
  Yes — enter your estimated annual property tax and insurance in the "Other Costs" section for a complete picture of the all-in monthly payment used in the DTI calculation.

How Much House Can You Really Afford?

Lenders don't decide affordability based on the home price alone — they look at your income relative to your debts. The two benchmarks most underwriters use are the 28/36 rule: your total monthly housing payment should stay at or below 28% of your gross monthly income, and your total debt payments (housing plus car loans, student loans, and minimum credit-card payments) should stay at or below 36%. This calculator applies those ratios automatically, but it also lets you stress-test them against your real budget, because the number a bank will approve is often higher than the number you can comfortably live with.

Worked Example

Say you earn $90,000 a year — $7,500 per month gross. The 28% front-end limit puts your maximum housing payment at $2,100. If you have a $400 car payment and $150 in student loans, the 36% back-end limit caps your total debt at $2,700, which still leaves room for the $2,100 housing payment. At a 6.75% rate on a 30-year loan with 20% down and typical taxes and insurance, that payment supports a home in the low-to-mid $300,000s. Lowering your rate, extending nothing else, or clearing the car loan all push that ceiling higher — try each in the calculator to see the effect.

Costs Buyers Forget

Affordability isn't just the mortgage. Property taxes vary enormously by state and county, homeowner's insurance has climbed sharply in many markets, and a home that needs an HOA adds a fixed monthly cost that counts against your ratios. Beyond the monthly payment, budget for closing costs (typically 2–5% of the purchase price), moving expenses, and a maintenance reserve of roughly 1% of the home's value per year. A house at the very top of your approved range leaves little cushion for these, which is why many financial planners suggest buying below your maximum.

• What income do I need to buy a $400,000 house?
  With 20% down at around 6.75%, the payment on a $400,000 home runs roughly $2,600–$2,900 a month including taxes and insurance. Under the 28% rule that implies a gross income of about $110,000–$125,000, though a larger down payment or lower other debts reduces the income needed.
• Does my down payment change how much I can afford?
  Yes. A larger down payment lowers the loan amount and the monthly payment, letting the same income support a higher purchase price. It can also eliminate PMI once you cross 20% equity, freeing up more of your monthly budget.
• Should I borrow the maximum the calculator allows?
  Usually not. The 28/36 limits are ceilings, not targets. Leaving a margin below them protects you against rate changes, emergencies, and the ongoing maintenance costs of ownership.