Home Affordability Calculator
Estimate how much house you can afford from your monthly income, existing debt payments, down payment, interest rate, and loan term, using both a conservative 28/36-rule scenario and a maximum FHA-style approval scenario.
What is home affordability?
Home affordability is the loan amount you can comfortably repay given your income and existing debt obligations, as opposed to the maximum amount a lender might technically approve. Knowing your affordable range before you start house hunting helps you focus your search on a realistic budget.
While money.wealth.dti_calculator calculates your DTI forward from your existing income and debts, this tool works backward: it solves for the loan amount that satisfies a target DTI. It shows two scenarios side by side — a conservative estimate based on the 28/36 rule, and a maximum estimate based on the more relaxed 43% back-end DTI guideline used by FHA and similar programs — so you can see both a realistic budget and the approval ceiling.
How to use
- Enter your monthly gross income Enter your total pre-tax monthly income (you may include household income if applying jointly)
- Enter your existing debt payments Enter the total of your monthly auto loan, student loan, credit card, and other non-housing debt payments
- Enter your down payment, interest rate, and loan term Enter the down payment you plan to make, the rate your lender has quoted, and your desired loan term
- Enter your estimated tax and insurance Enter the estimated monthly cost of property tax and homeowners insurance beyond principal and interest (you can leave this at 0 if unsure)
- Review the result Your affordable home price is shown for both a conservative scenario and a maximum approval scenario
Tips for getting more out of it
- A larger down payment lets you afford a more expensive home for the same monthly housing budget. Try re-running the calculation with a few different down payment amounts.
- Since your actual rate depends on your lender and credit profile, compare quotes from a few lenders and see how much your affordability changes with each rate.
- If the gap between the conservative and maximum scenarios is large, keep in mind that borrowing close to the maximum leaves less cushion for future rate increases or income loss.
- Paying down existing balances such as auto loans or credit cards lowers your existing debt payment and can increase how much you can afford.
Use cases
Setting a budget before house hunting
Know your comfortable spending ceiling before you start browsing listings on real estate sites
Deciding how much to save for a down payment
Re-run the calculation with different down payment amounts to see how much you need to save to reach your target home price
Checking the impact of rising interest rates
Simulate how much your affordable loan amount would shrink if interest rates rise
Comparing against your current debt payoff plan
Check your current DTI with money.wealth.dti_calculator, then see how much your affordability would grow after paying down existing debt
Glossary
- Affordability
- The loan amount or home price you can comfortably repay given your income and existing debt, as distinct from the maximum a lender might approve.
- 28/36 rule
- A traditional guideline suggesting front-end DTI (housing only) should stay at or below 28% and back-end DTI (all debts) at or below 36%.
- FHA loan
- A mortgage insured by the U.S. Federal Housing Administration, which can approve borrowers with a higher DTI (typically up to around 43%) than conventional loans.
- Escrow
- An arrangement in which your lender collects property tax and homeowners insurance along with your monthly principal and interest, then pays those bills on your behalf.
- Amortizing loan
- A loan repaid in equal monthly installments of principal and interest over the loan term. This calculator assumes this repayment method when solving for the loan amount.
FAQ
Side Note — What you can borrow isn't always what you should borrow
In mortgage lending, the amount a lender is willing to approve and the amount a borrower can comfortably repay are not always the same thing. Underwriting mainly verifies a floor of repayment ability — approval alone doesn't mean that borrowing the full approved amount is the right choice for your household budget.
One lesson often drawn from the global financial crisis of the late 2000s is that this gap between "what you can borrow" and "what you can repay" was not taken seriously enough at the time. In its aftermath, mortgage underwriting became stricter in many countries, and objective measures like DTI gained more weight in lending decisions.
Financial advisors often suggest even more conservative targets than official lending guidelines, such as keeping housing payments to around 20-25% of take-home pay. Separating "what a lender will approve" from "what you can comfortably live with" is a theme that shows up across mortgage markets worldwide, even as the specific rules and thresholds differ from country to country.