How Much House Can I Afford (with Calculator)?

Buying a house is a monumental decision that has a significant impact on your financial life. One of the most common questions that prospective homebuyers ask is, “How much house can I afford?” It’s crucial to have a clear understanding of your financial situation before committing to a mortgage, as this will help you avoid financial stress in the future.

House Affordability Calculator

To simplify the process, we’ve created a user-friendly home affordability calculator that will help you understand your budget in just a few clicks. This calculator factors in your annual income, existing debts, down payment, and other crucial aspects to give you an estimate of how much house you can afford.

Use this calculator to help you determine how large of a mortgage you can qualify for, and by extension, determine the maximum value of house you can purchase.

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Annual Salary ($):
Other Annual Income ($):

Mortgage Parameters:

Down Payment ($):
Loan Term (years):
Interest Rate (%):
Monthly Mortgage Insurance($):
Monthly Housing Expenses ($):

Debt & Mandatory Payments (Monthly):

Minimum Credit Card Payments ($):
Student Loan Payments ($):
Car Loan Payments ($):
Minimum Other Loan Payments ($):
Other Mandatory Expenses ($):

Debt-To-Income Ratios:

Front DTI: 28% 30% 31% 33% 36%

Back DTI: 33% 36% 38% 40% 43% 50%

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Working on your results…this might take a few seconds…Thanks for waiting!

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Usage Guide

Buying a house is not a small decision and naturally a calculator that helps you get the right answer needs many inputs. Please don’t be intimidated by the number of inputs requested here. Let’s look at them one-by-one here and you’ll see it’s pretty straightforward!

Inputs

Income

• Annual Salary: Your pre-tax annual salary. If you are paid hourly, then you can use our hourly wage to annual salary calculator to figure out your annual salary.
• Other Annual Income: If you have regular income from side hustles, or investment income, or alimony income, then you can enter that here. It’s important to note that you will likely have to show at least 2 years of consistency in income here.

Mortgage Parameters

• Down Payment: The amount of cash that you can put down while buying your house
• Loan Term: Typically this value is 30 years, but you can use another term if you prefer.
• Interest Rate: The all important rate. You can use a market based rate or a specific number if you have one.
• Monthly Housing Expenses: This includes things like your estimated property taxes, utility costs, home insurance, etc. This value is an important figure, so please enter as an accurate estimate as possible.

Debt & Mandatory Payments (Monthly)

Use the fields to enter in your minimum mandatory payments for each of the debt payments.

For Other Mandatory Expenses, enter in mandatory payments and expenses like collections, alimony, child support, or any thing that you are legally obligated to pay on an on-going basis for the long term.

Debt-To-Income Ratios

These are the ratios that are used by banks to determine how big your mortgage payment can be. These are drop-down boxes are set at the typical values used by lenders. However if you would like to use more relaxed criteria, then feel free to modify these ratios to other values. Just remember that the looser the ratios, the higher your mortgage rate will likely be.

Different banks and organizations use varying levels of stringency on these ratios, so you will have to tailor it to your situation.

Output

The calculator shows the maximum value of the house based on the values you have entered. It also shows the maximum value of the corresponding monthly mortgage payment.

It also displays the pre-tax residual income. The residual income is another important qualifying criteria used by some mortgage lenders. To get your residual income, subtract your monthly income taxes from the pre-tax figure shown here.

A chart shows what the components of your monthly payment look like and how the various limits are applied.

Before You Go…

I hope you found this calculator useful!

As you saw here, reducing your other debts can potentially help you qualify for a larger mortgage as it frees up your monthly cash outflow. If you want to figure out how you can quickly reduce your loans, try playing around with the loan payment calculator.

There are plenty of other calculators that we have developed to help simplify your personal finances, including one that helps you calculate your mortgage payment, if you already know the value of your home. A specific variant of this calculator is available if you’re trying to work out how much income is needed to get a $450k mortgage.