Tools
Home affordability
How Much House Can I Afford?
How Much House Can I Afford?
RECOMMENDED BUDGET
MAX PURCHASE BUDGET
Monthly Housing Cost Breakdown
How to Use the Home Affordability Calculator
If you’re wondering “How much house can I afford?” — you’re in the right place. Our free Home Affordability Calculator gives you an instant estimate based on your income, loan preferences, and housing expenses. Below is a step-by-step walkthrough that explains each section, how it works, and what your results mean — complete with real-world examples.
1. Enter Your Annual Income (Gross or Net)
You can use either gross income (before taxes) or net income (after taxes and deductions)
- Gross income is what most mortgage lenders use to determine how much house you qualify for.
- Net income is great for realistic budgeting.
Example: If you earn $90,000 before taxes, that’s your gross income. If your take-home pay after taxes is around $65,000, that’s your net income.
2. Understand the Recommended vs. Max Purchase Budget
The calculator shows two home price estimates:
- Recommended Budget – Based on 28% of gross or 34% of net income. This is a safe and sustainable monthly payment.
- Max Purchase Budget – Based on 36% of gross or 43% of net income. This is the upper limit most lenders will approve if you have minimal debt.
Example: If your monthly gross income is $7,500, your recommended housing budget is around $2,100/month, and your max is around $2,700/month.
3. How Your Affordable Home Price is Calculated
Your estimated home price is based on what monthly mortgage payment fits within your income — after accounting for interest rate, loan term, and costs like taxes and insurance.
Example: With a $2,100 monthly budget at 7% interest over 30 years, you could afford a home worth around $330,000 (depending on down payment and other costs).
4. See Your Monthly Payment Breakdown
Your estimated monthly payment includes more than just your mortgage:
- Principal & Interest – your base loan payment
- Property Taxes – often 1–2% of the home value per year
- Homeowners Insurance – typically $80–$150/month
- HOA Fees – if applicable, usually $100–$400/month
A pie chart helps you visualize where every dollar goes — helping you avoid unexpected costs.
5. Enter Your Down Payment
A larger down payment lowers your monthly mortgage and total interest paid. Enter a dollar amount you’ve saved or plan to use.
Example: If you’re buying a $350,000 home and put down $70,000, your loan would be $280,000. With a 7% interest rate, that’s around $2,100/month.
6. Choose Loan Term and Interest Rate
Loan term affects both your monthly payment and interest paid over time. Choose between a 30-year or 15-year loan. Enter the current interest rate you expect to qualify for (most lenders offer 6–8% as of 2024).
Example: A 15-year loan has higher monthly payments but saves tens of thousands in interest compared to a 30-year loan.
Final Tips for Buyers
- This calculator assumes little or no monthly debt.
- Use real tax and insurance data for your area to get the most accurate estimate.
- Always get a mortgage preapproval before starting your home search.
- Factor in other monthly expenses like utilities, savings, and emergency funds.
Top 10 Mistakes People Make When Estimating Home Affordability
Thinking of buying a home? Avoid these common home affordability mistakes that can cost you thousands — or even your dream home.
1. Forgetting About Full Monthly Costs
Many buyers think they can afford a home if the mortgage fits their budget — but forget about taxes, insurance, and HOA fees.
Tip: Always include the full monthly payment in your budget, not just the loan amount.
2. Using Gross Income Without Budgeting for Real Life
Gross income (before taxes) doesn’t reflect your actual take-home pay.
Tip: Use net income in our calculator to see what you can really afford each month.
3. Trying to Afford the Maximum You Qualify For
Just because a lender approves you for a higher amount doesn’t mean you should spend it.
Tip: The “Recommended Budget” helps you avoid being house-poor.
4. Underestimating Property Taxes and Insurance
Taxes and insurance vary by location — and they can make or break your budget.
Tip: Look up average rates in your area, or use our calculator’s estimate as a guide.
5. Forgetting About Future Expenses
Home repairs, new furniture, baby expenses — these costs add up.
Tip: Leave room in your budget for savings and unexpected costs.
6. Not Accounting for HOA Fees
If you’re buying a condo or home in a community, HOA fees can be $100–$400+ a month.
Tip: Always check if there’s an HOA, and add those fees to your housing costs.
7. Assuming 20% Down Is Required
Many first-time buyers wait too long thinking they need 20% saved.
Tip: You can often buy a home with 3%–10% down (but you may pay PMI (Private Mortgage Insurance)).
8. Ignoring the Loan Term and Interest Rate
A 30-year vs. 15-year mortgage can drastically change your payment — and how much house you can afford.
Tip: Use the calculator to compare both and see what fits your budget best.
9. Overlooking Closing Costs
You’ll likely need 2–5% of the home’s price for closing costs.
Tip: Budget for closing costs in addition to your down payment.
10. Not Getting Preapproved Early
Using a calculator is smart — but it’s not a guarantee. You still need to get preapproved by a lender to make real offers.
Tip: Use our calculator to plan, then talk to a lender before house hunting.
FAQ: Real Buyer Questions
1. What is a good debt-to-income (DTI) ratio for buying a house?
Most lenders prefer a housing DTI of 28% and a total DTI (including other debts) of 36% or less.
Example: If you earn $6,000/month before taxes, your mortgage payment should be under $1,680/month.
2. Should I use gross income or net income to estimate affordability?
Gross income is what lenders use. Net income is better for real budgeting.
Plain advice: Use gross to see what a bank might approve. Use net to know what you can comfortably afford.
3. How much house can I afford with a $100,000 salary?
That depends on your interest rate, down payment, and whether you use gross or net income.
Rough estimate:
- Recommended budget: ~$2,300/month
- Could afford: $340,000 to $400,000 depending on terms and taxes
4. How much should I put down on a house?
Ideally 20% to avoid PMI, but many people buy with as little as 3% down.
Tip: Use the calculator to see how different down payments affect your monthly cost.
5. What is included in my monthly mortgage payment?
Most monthly payments include:
- Principal & interest
- Property taxes
- Homeowners insurance
- HOA fees (if applicable)
The calculator shows you a full breakdown of these costs.
6. How accurate is this home affordability calculator?
Our calculator follows the same basic rules lenders use — based on income, debt ratios, and costs.
Reminder: It’s a great starting point, but exact approval depends on your credit score and full financial picture.
7. Will home prices or interest rates change how much I can afford?
Absolutely. Even a 1% change in interest rates can raise or lower your budget by tens of thousands of dollars.
Tip: Use our calculator often — especially if rates are moving.
8. Can I buy a home with no debt and a lower income?
Yes — if you have little or no debt, lenders may allow you to use more of your income toward housing.
Example: A $70K income with zero debt could afford a similar home to someone making $90K with high debt.
9. What are closing costs, and how much should I expect?
Closing costs usually range from 2% to 5% of the home price.
On a $300,000 home: Expect around $6,000–$15,000. These are not included in your monthly mortgage.
10. Should I buy a home at the top of my budget?
Not unless your income is secure and you have an emergency fund.
Better approach: Stay within your recommended range and leave room for life events.