Home Affordability Calculator

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Stored only in this browser. Compare Houses uses these numbers to show which listings fit your budget.

How the Affordability Calculator Works

Lenders use two key ratios to decide how much they will lend you. The front-end ratio (housing costs ÷ gross monthly income) must stay below 28%. The back-end ratio (all monthly debts including housing ÷ gross monthly income) must stay below 36% for conservative lending or 43% for stretch. Your affordable price is the lower of the two limits — Conservative and Moderate use the 36% back-end cap; Stretch uses the 43% FHA limit.

Tips & Insights

  • Get pre-approved before house-hunting — it locks your rate, speeds up closing, and shows sellers you're serious.
  • Paying down revolving credit card debt can boost your affordable budget more than earning extra income, because it directly lowers your back-end DTI.
  • 20% down eliminates PMI and typically saves $100–200/month, but tying up extra cash has an opportunity cost. Model both scenarios with the Mortgage Comparison tool.
  • Your emergency fund must stay intact. Lenders check that you still have reserves after down payment and closing costs clear.

Common Questions

Why is my affordable price so low?

Check that income is your annual gross (pre-tax) total and that debt fields show monthly minimum payments — not card balances. A common mistake is entering a credit card balance instead of the minimum payment.

Conservative vs. Stretch — which should I use?

Conservative (28/36) is what most conventional lenders require. Stretch (43%) reflects FHA guidelines. Shopping at or below the conservative number leaves room for surprises — job changes, rate increases, or unexpected repairs.

How accurate is this vs. what a lender will say?

Very close — we use the same DTI rules lenders apply. Your actual qualified amount will shift based on your credit score, loan program, and lender overlays. Use this to bracket your search, then get a real pre-approval letter for the exact figure.
Max home price $400KTotal Monthly Housing $3,080/mo See full results

Income

Gross monthly = annual ÷ 12. Example: $120,000 ÷ 12 = $10,000/mo. Use pre-tax household total — lenders use this number to compute both DTI ratios.
Enter the monthly amount. Added directly: total gross monthly = (annual ÷ 12) + this field.

Monthly Debts (existing)

Monthly car loan payments for all vehicles. Feeds back-end DTI: (housing + all debts) ÷ gross monthly ≤ 36%. Enter payment, not balance.
Monthly student loan payments. Each $100/mo in debt reduces buying power by roughly $12,000–15,000.
Minimum required payment only — not your balance. Typical minimum ≈ balance × 1–2%. Only the minimum counts in DTI.
Personal loans, child support, alimony, co-signed debts. All recurring monthly obligations count in your back-end DTI.

Savings & Down Payment

Cash + liquid investments. Available = savings − emergency fund. Must cover: down payment (price × dp%) + closing costs (price × cc%).
Not counted toward the purchase. Available = savings − this. Lenders verify ≥ 2 months of full housing payment remain after closing.
PMI formula (when < 20% down): PMI ≈ loan × 0.85% ÷ 12. Example: 10% down on $400k → $360k loan → PMI ≈ $255/mo until 80% LTV.

Loan & Location Settings

P&I formula: M = P × r(1+r)ⁿ / [(1+r)ⁿ−1], r = rate ÷ 1200, n = months. Example: 6.75% on $360k, 30yr → $2,335/mo. Each 0.5% ≈ ±$100–120/mo.
More options Tax 1.1%Insurance $1,500HOA $0/moClosing 2.5%
Monthly tax = home price × rate ÷ 12. Example: $400k × 1.1% ÷ 12 = $367/mo. Find your county's exact rate at the assessor's website.
Monthly = annual ÷ 12. Example: $1,500/yr ÷ 12 = $125/mo. National average ~$1,400/yr; higher in coastal or wildfire-prone areas.
Due at signing, not monthly. Formula: closing = price × %. Example: 2.5% of $400k = $10,000 upfront. Typical 2–4%; higher in NY, PA, FL.

Results — What You Can Afford

A home around $400K fits your monthly budget, but you'd need $19,973 more saved to buy it.

Conservative (28% front-end)
$362K
Max home price
~$2,800/mo total housing
Moderate (36% back-end DTI)
$400K
Max home price
~$3,080/mo total housing
Stretch (43% back-end DTI)
$457K
Max home price
~$3,500/mo total housing

Monthly Payment Breakdown (Moderate)

Principal & Interest$2,334
Property Tax$366
Homeowner's Insurance$125
PMI (<20% down)$255/mo
HOA—
Total Monthly Housing$3,080

Upfront Money Needed (Moderate)

Down Payment$39,978
Closing Costs$9,995
Total Needed Upfront$49,973
Your available (after emergency)$30,000
Shortfall / Surplus $19,973 short
Your DTI (Moderate scenario) 30.8%
28% 36% 43%
💡 You need $19,973 more in savings for the moderate scenario. Consider the conservative target ($45,237 upfront) or a lower down payment %.
Next step See closing costs for a $400K home