🏠Mortgage Affordability Calculator
Estimate how much house you can afford based on your income, debt, and down payment.
Last updated: January 4, 2026
How to Use the Mortgage Affordability Calculator
- Enter your Income: Input your gross annual income (before taxes).
- Add your Debts: Sum up monthly payments for credit cards, car loans, studen loans, etc.
- Down Payment & Rate: Enter how much cash you have for a down payment and the expected interest rate.
- Property Details: Adjust property estimates like tax rate, insurance, and HOA fees to match your local market.
- DTI Select: Choose a conservative (36%) or aggressive (45%+) ratio to see how it affects your buying power.
Formula & Methodology
Mortgage Affordability Formula
We use the Debt-to-Income (DTI) ratio method to determine how much you can afford.
1. Calculate Max Monthly Housing Payment: $$ \text{Max Payment} = \left( \frac{\text{Annual Income}}{12} \times \text{Target DTI} \right) - \text{Monthly Debts} $$
2. Breakdown of Monthly Payment: The monthly payment covers:
- Principal & Interest (P&I)
- Property Taxes (T)
- Home Insurance (I)
- HOA Fees
3. Solve for Home Price: Since Property Taxes and P&I depend on the Home Price and Loan Amount, we solve for the Price ($P$) using:
$$ P = \frac{\text{Max Payment} - \text{Insurance} - \text{HOA} + (\text{Down Payment} \times \text{Mortgage Factor})}{\text{Mortgage Factor} + \text{Monthly Tax Rate}} $$
Where Mortgage Factor is the standard amortization factor based on your interest rate and loan term.
Determining how much house you can afford is the first step in the home buying journey. This mortgage affordability calculator provides a detailed estimate based on your income, debts, and current market conditions. By using the standard 28/36 rule, it ensures you don't stretch your budget too thin.
Whether you're a first-time homebuyer or looking to upgrade, understanding your buying power helps you target the right properties and secure a loan comfortably.
What Determines Your Mortgage Affordability?
Lenders look at several key factors to decide how much they are willing to lend you. Improving these metrics can significantly boost your home affordability.
1. Gross Annual Income
Your total household income before taxes is the baseline. This includes salary, bonuses, commissions, and other consistent income sources. Lenders want to see stability here.
2. Debt-to-Income Ratio (DTI)
This is one of the most critical metrics. Your back-end DTI (total monthly debt payments divided by gross monthly income) typically shouldn't exceed 36-43%. Lower debt means you can afford a higher mortgage payment.
3. Down Payment
A larger down payment reduces the loan amount and your monthly payments. It also avoids Private Mortgage Insurance (PMI) if you put down at least 20%, saving you hundreds of dollars a month.
4. Interest Rate
Even a small difference in mortgage rates impacts your monthly payment. A lower rate increases your buying power for the same monthly budget.
Understanding the 28/36 Rule
Most financial advisors and lenders use the 28/36 rule as a safe guideline for affordability:
- Front-End Ratio (28%): Your housing costs (mortgage principal, interest, taxes, insurance, and HOA) should not exceed 28% of your gross monthly income.
- Back-End Ratio (36%): Your total monthly debt payments (housing costs + credit cards + student loans + car loans) should not exceed 36% of your gross monthly income.
While some loan programs (like FHA or VA loans) allow higher ratios (up to 43% or even 50%), staying within the 28/36 rule is considered financially prudent to avoid being "house poor."
Hidden Costs of Homeownership
When calculating affordability, it's crucial to remember that your mortgage payment isn't the only expense. This calculator includes estimates for:
- Property Taxes: Usually 1-2% of the home value annually, paid monthly.
- Homeowners Insurance: Protects your property against damage and liability.
- HOA Fees: If you buy a condo or in a planned community, these monthly fees can be significant.
About Mortgage Affordability Calculator
Our mortgage affordability calculator is a free, easy-to-use tool designed to help youestimate how much house you can afford based on your income, debt, and down payment.. For professionals or those who need quick calculations, our calculator provides accurate results instantly.
Frequently Asked Questions
The 28/36 rule is a common guideline used by lenders. It states that your household expenses (mortgage, insurance, taxes) should not exceed 28% of your gross monthly income, and your total debt (including housing) should not exceed 36%.
Higher interest rates increase your monthly mortgage payments, which significantly reduces the loan amount you can afford for the same monthly budget. A 1% increase in rate can reduce your buying power by 10% or more.
Yes, if you are applying for the mortgage together (co-borrowers), include the total household income and total household debts.
The estimated monthly payment includes Principal, Interest, Property Taxes, Homeowners Insurance, and HOA fees (if applicable). It does not include utilities or maintenance costs.