House Affordability Calculator
Determine how much house you can afford with our advanced calculator. Consider your income, debts, and other financial factors to find your ideal home price range.
Calculate Your Home Affordability
Affordability Summary
$1,420
$70,000
$280,000
38%
Payment Breakdown
Recommendations
Aim for a down payment of at least 20% to avoid PMI
Consider a 15-year loan for significant interest savings
Your DTI ratio is slightly high. Paying down debts could improve eligibility
Additional Scenarios
Adjust Down Payment
See how different down payment amounts affect your affordability
Interest Rate Comparison
Compare monthly payments at different interest rates
Loan Term Analysis
Evaluate the impact of different loan terms on your budget
Frequently Asked Questions
Understanding Home Affordability
Determining how much house you can afford is a critical first step in the homebuying process. Our calculator uses industry-standard metrics to provide a realistic estimate based on your financial situation, but it's important to understand the underlying factors that influence affordability.
Key Factors in Home Affordability
- Income: Your total earnings play a primary role in determining how much you can borrow.
- Debts: Existing monthly debt payments reduce the amount you can allocate to a mortgage.
- Down Payment: A larger down payment reduces the loan amount and may lower monthly payments.
- Interest Rates: Even small changes in rates can significantly impact your monthly mortgage cost.
- Credit Score: Higher scores typically qualify for better interest rates and loan terms.
- Loan Term: Longer terms result in lower monthly payments but higher overall interest costs.
How Lenders Evaluate Affordability
Lenders use two primary ratios to assess your ability to repay a mortgage:
- Front-End Ratio: Your housing expenses (principal, interest, taxes, insurance) should generally not exceed 28-31% of your gross monthly income.
- Back-End Ratio: Your total monthly debt (including housing) should typically not exceed 36-43% of your gross monthly income.
These ratios can vary by lender and loan type, so it's important to discuss specific requirements with your mortgage provider.
Tips for Improving Affordability
Boost Your Credit Score
Pay bills on time, reduce credit card balances, and avoid opening new lines of credit before applying for a mortgage.
Increase Your Down Payment
Saving for a larger down payment reduces your loan amount and can help you qualify for better terms.
Reduce Existing Debts
Paying off high-interest debts like credit cards or personal loans lowers your DTI ratio and increases borrowing power.
Types of Mortgage Loans
Different loan programs have varying requirements and benefits. Here's an overview of common options:
| Loan Type | Down Payment | Credit Score | PMI Required |
|---|---|---|---|
| Conventional | 3-20% | 620+ | Yes (if <20% down) |
| FHA | 3.5% | 580+ (500-579 with 10% down) | Yes |
| VA | 0% | Typically 620+, varies by lender | No |
| USDA | 0% | 640+ | Yes |
Next Steps After Calculating Affordability
- Get Pre-Approved: Work with a lender to get pre-approved for a mortgage. This provides a concrete budget and strengthens your offer when buying a home.
- Explore Loan Options: Research different loan programs to find the best fit for your financial situation and long-term goals.
- Save for Closing Costs: In addition to your down payment, budget for closing costs, which typically range from 2-5% of the home price.
- Start House Hunting: Use your affordability estimate to narrow down your search to homes within your price range.
- Consider Future Expenses: Factor in potential increases in property taxes, insurance, and maintenance costs when determining your comfort level.
Remember, while our calculator provides a helpful starting point, consulting with a qualified mortgage professional is essential for personalized advice and accurate pre-approval.