How Much House Can I Afford?

How We Calculate Affordability

Our calculator uses the standard debt-to-income (DTI) ratio that mortgage lenders use to determine how much you can borrow. Here's how it works:

The 28/36 Rule

Most lenders follow the "28/36 rule":

• 28% Front-End Ratio: Your monthly housing costs (mortgage, taxes, insurance) should be no more than 28% of your gross monthly income
• 36% Back-End Ratio: Your total monthly debt payments (including housing) should be no more than 36% of your gross monthly income

Our calculator uses the back-end ratio by default, as it accounts for your existing debts.

What's Included in Housing Costs

• Principal & Interest: Your monthly mortgage payment
• Property Taxes: Annual taxes divided by 12
• Homeowner's Insurance: Required by lenders
• PMI: Private Mortgage Insurance if down payment is less than 20%
• HOA Fees: If applicable to the property

Conventional vs FHA (Quick Context)

FHA loans can allow higher DTIs and smaller down payments, while conventional loans often offer better long‑term costs if you have stronger credit and a larger down payment. Use this calculator as a baseline, then confirm limits with your lender.

Tips to Afford More Home

1. Increase your down payment - A 20% down payment eliminates PMI
2. Pay off existing debts - This improves your DTI ratio
3. Shop for better interest rates - Even small rate differences matter
4. Consider a longer loan term - 30-year vs 15-year loans have lower payments
5. Look in areas with lower property taxes - This varies significantly by location

Important Considerations

Just because you can afford a certain price doesn't mean you should buy at that price. Consider these additional factors:

• Emergency fund (3-6 months of expenses)
• Closing costs (2-5% of home price)
• Moving expenses and initial repairs
• Ongoing maintenance (budget 1-2% of home value annually)
• Future life changes (career, family, etc.)

Use our rent vs buy calculator to see if buying makes financial sense for your specific situation.

Example Scenario

A household earning $110,000 with $600/month in other debt can afford less than a similar income household with no debt—even if the down payment is the same. That’s why we prioritize back‑end DTI.