House Affordability Calculator

Home affordability is typically calculated using the 28/36 rule. The front-end ratio (28%) suggests that your housing costs (mortgage, taxes, insurance) should not exceed 28% of your gross monthly income. The back-end ratio (36%) suggests that your total debt payments (including housing) should not exceed 36% of your gross monthly income. Our calculator uses these guidelines along with your specific financial information to determine how much house you can afford.

Several factors affect how much house you can afford, including your income, existing debts, credit score, down payment amount, interest rate, loan term, property taxes, homeowners insurance, and HOA fees. Lenders also consider your debt-to-income ratio (DTI) and employment stability. Our calculator takes all these factors into account to provide you with an accurate estimate of your home affordability.

Your credit score significantly impacts the interest rate you’ll receive on your mortgage, which directly affects how much house you can afford. A higher credit score typically qualifies you for a lower interest rate, which reduces your monthly payment and allows you to afford a more expensive home. Conversely, a lower credit score may result in a higher interest rate, reducing your affordability. Our calculator adjusts the estimated interest rate based on your credit score range.

A good debt-to-income (DTI) ratio for a mortgage is typically 36% or less, with no more than 28% of that going toward housing expenses. However, some loan programs may allow higher DTI ratios. FHA loans, for example, may allow DTI ratios up to 43% or higher in some cases. A lower DTI ratio generally makes you a more attractive borrower and may qualify you for better loan terms.

To increase how much house you can afford, consider: 1) Increasing your down payment to reduce the loan amount and potentially avoid PMI; 2) Improving your credit score to qualify for a lower interest rate; 3) Paying down existing debts to lower your DTI ratio; 4) Increasing your income through a raise, second job, or co-borrower; 5) Choosing a longer loan term to reduce monthly payments; 6) Looking for areas with lower property taxes; 7) Considering a home with lower HOA fees or no HOA.