Home Affordability Calculator — How Much House Can I Afford?

• The 28/36 rule: spend no more than 28% of gross income on housing and 36% on total debt — this is the gold standard lenders use
• Lenders allow up to 43% DTI for conventional loans, but 36% or below is the comfort zone for most homebuyers
• Down payments under 20% require Private Mortgage Insurance (PMI) — typically 0.5-1% of the loan amount annually
• Closing costs add 2-5% of the home price on top of your down payment — budget $8,000-$15,000 for a $300K home
• A 1% change in interest rate on a $300K loan changes your monthly payment by approximately $180-$200

Use Cases

Frequently Asked Questions

How much house can I afford on a $80,000 salary?

With an $80,000 salary, 20% down payment, 6.75% interest rate, and $500/month in existing debts, you can afford approximately $290,000-$380,000 depending on your DTI comfort level. At the conservative 28% DTI, expect ~$290K. At the conventional maximum 43% DTI, up to ~$380K. Property taxes, insurance, and HOA fees in your area also affect the final number.

What is the 28/36 rule for home buying?

The 28/36 rule is a guideline that says: (1) No more than 28% of your gross monthly income should go to housing costs (mortgage, taxes, insurance — called 'front-end DTI'); (2) No more than 36% should go to total debt payments including housing (called 'back-end DTI'). For a $7,000/month gross income, that means max $1,960 for housing and $2,520 for all debts combined. Most financial advisors recommend staying within this range.

What is DTI and what should mine be?

DTI (Debt-to-Income ratio) is the percentage of your gross monthly income that goes to debt payments. There are two types: Front-end DTI (housing costs only) and Back-end DTI (all debts including housing). For conventional mortgages, lenders typically require back-end DTI under 43%. For FHA loans, up to 50% may be allowed. The comfortable range recommended by financial advisors is 36% or below.

How much down payment do I need?

Conventional loans require as little as 3-5% down. FHA loans require 3.5%. VA and USDA loans offer 0% down. However, putting down less than 20% means you'll pay PMI (Private Mortgage Insurance), which adds 0.5-1% of the loan amount annually to your costs. A 20% down payment eliminates PMI and gives you the most competitive rates. For a $350,000 home: 3.5% = $12,250, 10% = $35,000, 20% = $70,000.

What is PMI and how much does it cost?

PMI (Private Mortgage Insurance) is required when your down payment is less than 20% of the home price. It protects the lender (not you) if you default. PMI typically costs 0.5-1% of the loan amount per year, added to your monthly payment. On a $300,000 loan, that's $125-$250/month. PMI can be removed once you reach 20% equity (80% LTV). Our calculator automatically adds PMI when your down payment is below 20%.

How do interest rates affect home affordability?

Interest rates have a massive impact on affordability. On a $300,000 loan over 30 years: at 5% rate, monthly P&I = $1,610. At 6% = $1,799. At 7% = $1,996. At 8% = $2,201. Each 1% increase reduces your maximum affordable home price by approximately 10-12%. A buyer who could afford $400,000 at 5% might only afford $350,000 at 7%. This is why rate shopping across multiple lenders is critical.

What costs are included in a monthly mortgage payment?

A full monthly mortgage payment (PITI+) includes: Principal (pays down the loan balance), Interest (cost of borrowing), Property Tax (annual tax divided by 12, typically 0.5-2.5% of home value), Home Insurance (hazard/homeowner's insurance, ~$100-$200/month), PMI (if down payment < 20%, ~$50-$250/month), and HOA fees (if applicable, $50-$500+/month). Many people only consider P&I and are surprised by the full cost.

How much are closing costs?

Closing costs typically range from 2-5% of the home purchase price. On a $350,000 home, expect $7,000-$17,500 in closing costs. They include: origination fees (0.5-1%), appraisal ($300-$500), title insurance ($500-$1,500), inspection ($300-$500), attorney fees, recording fees, and prepaid items (property tax, insurance, HOA). Some lenders offer 'no-closing-cost' mortgages but with higher interest rates.

Should I get a 15-year or 30-year mortgage?

15-year mortgages have 0.5-0.75% lower interest rates, save $100,000+ in interest, and build equity faster. But monthly payments are 40-50% higher. 30-year mortgages have lower monthly payments, more flexibility, and let you invest the difference. Best approach: get a 30-year mortgage but make extra payments when you can. This gives flexibility while allowing faster payoff. Our calculator supports both — compare the monthly payments.

Is this calculator accurate for FHA, VA, or USDA loans?

This calculator uses conventional loan standards (43% max DTI). FHA loans allow up to 50% DTI with lower down payments (3.5%). VA loans have no PMI and no down payment requirement. USDA loans offer 0% down in eligible rural areas. For these programs, you may afford more than this calculator shows. However, the monthly payment breakdown and cost calculations remain accurate — just adjust the down payment and PMI fields accordingly.

How do property taxes vary by state?

Property tax rates vary dramatically by state. Lowest: Hawaii (0.29%), Alabama (0.41%), Colorado (0.51%). Highest: New Jersey (2.47%), Illinois (2.27%), New Hampshire (2.18%). National average: 1.1%. On a $400,000 home, property taxes range from $1,160/year (Hawaii) to $9,880/year (New Jersey). This $8,720 annual difference equals $727/month — enough to change your affordable home price by $100,000+. Always adjust the property tax rate for your specific area.

Should I buy the most expensive house I can afford?

No. Financial experts strongly recommend buying below your maximum. Reasons: (1) Life happens — job changes, medical expenses, repairs; (2) A lower payment lets you save and invest; (3) Being 'house poor' (spending max on housing, nothing left for life) is the #1 regret of homebuyers; (4) Maintenance costs add 1-2% of home value per year. Target the 'Comfortable' range in our calculator (85% of max), not the 'Maximum' or 'Stretch' levels.