House Affordability Calculator

How to use this calculator

1. Enter or choose gross annual income.
2. Enter or choose monthly debt payments.
3. Enter or choose down payment.
4. Enter or choose mortgage rate.
5. Enter or choose loan term.
6. The home price you can afford updates as you type. Use Copy result or Share to keep it.

Method

H = min(Front% × Income/12, Back% × Income/12 − Debts); Loan = (H − Down × t/12 − Insurance/12 − HOA) ÷ (k + t/12); Price = Loan + Down

H

maximum monthly housing cost

k

monthly payment per unit borrowed, i(1+i)^n ÷ ((1+i)^n − 1)

t

property tax rate per year

Worked example

1. Monthly income = 10,000. Housing limit 28% = $2,800; debt limit 36% − 500 = $3,100. The lower, $2,800, applies.
2. At 6.5% over 30 years, k = 0.0063207 per unit borrowed; tax is 1.1% ÷ 12 of the price; insurance $125 a month.
3. Loan = (2,800 − 60,000 × 0.011/12 − 125) ÷ (0.0063207 + 0.011/12) = $362,011.11; price = $422,011.11.
4. Check: 2,288.16 P&I + 386.84 tax + 125 insurance = $2,800.

On $120,000 a year with $500 of monthly debts and $60,000 down, the 28/36 guideline points to a home of about $422,000.

What the result means

This is the most the ratios allow, not a comfortable budget. Leave room for maintenance, savings and rate rises, and remember that closing costs and mortgage insurance (with a small down payment) add to the cost.

Assumptions and limits

• Fixed-rate mortgage with monthly payments.
• The 28% and 36% limits are common guidelines you can change; they are not legal limits.
• Property tax is a percentage of the purchase price.
• Mortgage insurance, closing costs and lender-specific credit rules are not included.
• Income is gross (before tax), as lenders usually use.