Home Affordability Calculator
Find out the maximum home price you can afford based on your income, down payment, and local property taxes — with a live payment breakdown.
Max home price
$335,737
Down payment covers 17.9% of the purchase price. PMI likely required (down payment < 20%).
Max loan amount
$275,737
Monthly P&I
$1,798
Monthly property tax
$336
Total monthly PITI
$2,333
- Uses the front-end DTI (PITI ÷ gross monthly income) to set the maximum payment. Back-end DTI (all debt) is not modeled here — existing car loans, student loans, or credit cards would reduce your actual qualifying amount.
- PMI (private mortgage insurance) is not included in the monthly breakdown but applies when the down payment is less than 20% — typically 0.5–1.0% of the loan amount per year, paid monthly.
- Property tax is computed as a percentage of the purchase price. Some counties reassess at purchase; others use assessed value, which may differ.
- Formula for max home price H:
H = (income/12 × DTI − insurance + down × k) ÷ (k + taxRate/12), wherek = r(1+r)ⁿ / ((1+r)ⁿ − 1)is the monthly mortgage factor.
How much house can you actually afford?
Lenders use two key ratios to determine how much house you qualify for: the front-end ratio (your housing payment as a percentage of income, typically 28%) and the back-end ratio (all monthly debt payments combined, typically 36–43%). But lenders' affordability is not the same as your personal affordability.
The real question is: after paying for housing, do you still have room in your budget for savings, retirement contributions, emergency fund building, and life? Many people stretch to the maximum lender-approved amount and find themselves "house poor" — owning a home they can't enjoy financially because every dollar goes to the mortgage.
Why it matters to your money
Choosing the right home price affects every other aspect of your financial life. Buying a home that stretches you too thin means less for retirement, less for emergency savings, and less flexibility to handle job loss or other setbacks. It's better to buy a home you can comfortably afford and invest the difference than to max out your budget and feel trapped.
Read the full guide on renting vs. buying for more context on how housing costs fit into your overall financial plan.
Rules of thumb
- The 28/36 rule: Housing should be no more than 28% of gross income; all debt should be no more than 36%. Conservative planners use 25% for housing and 33% for total debt.
- Don't forget PITI: The actual monthly payment includes Principal, Interest, Taxes, and Insurance — not just principal and interest. In some areas, property taxes alone add $300–$800/month.
- 20% down avoids PMI: Private Mortgage Insurance costs 0.5–1.5% of the loan per year. On a $300,000 loan, that's $1,500–$4,500/year for no benefit. Aim for 20% down unless the monthly difference is small.
Frequently asked questions
- How much house can I afford?
- Traditional guidelines suggest spending no more than 28% of gross monthly income on housing (PITI: principal, interest, taxes, insurance) and no more than 36% on total debt. Lenders typically allow up to 43–45% total debt-to-income ratio.
- What is PITI?
- PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a full monthly mortgage payment. Property taxes and insurance vary widely by location and add hundreds of dollars per month beyond the principal and interest payment.
- How does my credit score affect how much home I can afford?
- Your credit score affects the interest rate you're offered. A score above 760 typically qualifies for the best rates. Improving from 680 to 760 could reduce your rate by 0.5–1.0%, which on a $400,000 loan translates to $100–$200 less per month.
- What is PMI and how can I avoid it?
- Private Mortgage Insurance (PMI) is required on conventional loans with less than 20% down, typically costing 0.5–1.5% of the loan annually. You can avoid it with a 20% down payment, a piggyback loan, or certain lender-paid PMI programs (which raise your interest rate instead).