House Affordability Calculator: How Much Can I Afford?
How much house can I afford? Enter your income, monthly debts and down payment. The calculator keeps housing costs within your debt-to-income limits and works out the highest price that fits.
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Formula
- Housing budget
B = min(front limit x income / 12, back limit x income / 12 - other monthly debts) - Loan payment per 1 borrowed:
f = r x (1 + r)^n / ((1 + r)^n - 1), or1 / nat 0% interest - Monthly tax and insurance per 1 of price:
t = (tax % + insurance %) / 1200 - Maximum price:
P = (B + f x down payment) / (f + t)
Worked example
Income 120,000, no other debts, no down payment, 0% rate over 30 years, no tax or insurance, limits 28/36:
- Front budget: 0.28 x 10,000 = 2,800. Back budget: 3,600. The lower is 2,800.
f = 1/360,t = 0, soP = 2,800 x 360 =1,008,000.
With 1,500 of other debts the back budget is 3,600 - 1,500 = 2,100, so the price is 756,000.
When to use it
Use this page to set a price range before you search. It starts from income and debts. If you already have a price in mind, use the mortgage calculator for the payment and the down payment calculator for the deposit. The debt-to-income calculator checks your ratios for a payment you already know.
Second example
Income 90,000, debts 500 a month, down payment 60,000, 6.5% over 30 years, tax 1.2% and insurance 0.35% a year, limits 28/36. The housing budget is 2,100 a month (the front-end limit), the maximum price is about 325,687 and the loan about 265,687.
Common mistakes
- Spending the full budget; leave room for repairs, utilities and savings.
- Forgetting property tax, insurance and closing costs.
- Using a rate lower than lenders will offer you.
- Treating the result as a lender's approval.
Frequently asked questions
What is the 28/36 rule?
It is a common guideline that housing costs should stay under 28% of gross monthly income, and all debt payments, housing included, under 36%. On 120,000 a year that is 2,800 for housing, or 3,600 minus your other debts if that is lower.
How is the maximum price calculated?
The calculator takes the lower of the two budgets, then finds the price where the loan payment on (price - down payment) plus monthly property tax and insurance equals that budget. With 0% interest, no tax and no insurance, a 2,800 budget over 30 years supports 2,800 x 360 = 1,008,000.
Which ratio limits me?
The result names the limit that applies. Large monthly debts push you onto the total debt limit: with 1,500 of debts on a 120,000 income the budget falls from 2,800 to 2,100, so the price falls from 1,008,000 to 756,000 in the same example.
Is this what a lender would approve?
Not necessarily. Lenders use their own limits, credit history and rules, which differ by country. This is a planning estimate, and you may not want to spend your full budget.
How much house can I afford on a 100,000 salary?
With 500 of monthly debts, 50,000 down, a 6.5% rate over 30 years, 28/36 limits and tax plus insurance of 1.55% a year, the maximum price is about 348,036. The 28% front-end limit of 2,333.33 a month is what caps it.
How does the down payment change how much I can afford?
Each extra dollar of down payment adds to the price you can reach. On the same 100,000 income, raising the down payment from 50,000 to 70,000 raises the maximum price from 348,036 to 364,642, a gain of 16,606.
How do a lower interest rate or more debt change the answer?
At 5.5% instead of 6.5% the same buyer can afford about 375,523, roughly 27,487 more. Raising monthly debts to 1,500 makes the 36% back-end limit bind and cuts the price to about 238,564.