Home Affordability Calculator — How Much House Can I Afford? (2025)
Free home affordability calculator uses 28/36 debt-to-income rules to show exactly how much house you can afford. Get pre-qualified price range, monthly payment breakdown, and personalized scenarios.
Home Affordability Calculator — How Much House Can I Afford? (2025)
Enter your details below to calculate
Quick Scenarios
Current 30-year rate: ~7.0%
National average: ~1.1%
PMI only applies if down payment <20%
How to Use Home Affordability Calculator
Enter Your Total Annual Income
Input your gross annual income before taxes and deductions. Include salary, bonuses, commissions, and any other regular income. For dual-income households, combine both incomes. This determines your baseline affordability using the 28/36 debt-to-income rule.
Add Monthly Debt Obligations
Include all recurring monthly debt payments: auto loans, student loans, minimum credit card payments, personal loans, and any other debt obligations. Do not include current rent or housing costs—these will be replaced by your mortgage payment.
Specify Your Down Payment Amount
Enter your available down payment funds. Our calculator automatically accounts for PMI if under 20%. Larger down payments increase affordability, eliminate PMI costs ($100-$500/month), and often secure better interest rates.
Adjust Loan & Property Details
Set current mortgage rates (around 7% in late 2025), loan term (15 or 30 years), and estimate property tax rate (1.0-2.5% annually) and insurance costs for your target area. These significantly impact total monthly payment and affordability.
Analyze Your Results & Scenarios
Review your personalized affordability range, payment breakdown, and debt-to-income ratios. Try our quick scenarios (First-Time Buyer, Conservative, etc.) and export results to share with lenders during pre-approval.
Key Features
Accurate 28/36 debt-to-income ratio analysis
Monthly payment breakdown: principal, interest, taxes, insurance, PMI
Interactive affordability scenarios from conservative to aggressive
Location-specific adjustments for property taxes and insurance
Real-time calculations with 2025 mortgage rates around 7%
Quick scenario presets for different buyer profiles
Export your affordability analysis as PDF/JSON for lender pre-approval
Complete Guide: Home Affordability
A home affordability calculator helps you determine how much house you can realistically afford based on your income, debts, down payment, and current mortgage rates. Unlike simple mortgage calculators that only show payments, affordability calculators analyze your complete financial picture using industry-standard debt-to-income ratios that lenders actually use.
In 2025, with median home prices around $420,000 nationally and mortgage rates near 7%, understanding true affordability has never been more critical. This guide walks you through the complete home affordability calculation process, explains the key formulas lenders use, and provides actionable strategies to maximize your buying power while maintaining financial stability.
Understanding Home Affordability
Key Statistics (2025)
Median Home Price:
$420,000
Average Down Payment:
13% ($54,600)
30-Year Fixed Rate:
6.8% — 7.2%
Required Monthly Income:
~$7,500/month
Home affordability isn't simply about qualifying for a mortgage—it's about comfortably managing your monthly housing costs while maintaining your lifestyle, saving for emergencies, and achieving other financial goals. The 28/36 rule serves as the foundation for responsible home affordability calculations.
The 28/36 Debt-to-Income Rule
Lenders use two critical debt-to-income (DTI) ratios to evaluate mortgage applications. The front-end ratio should not exceed 28% of your gross monthly income, while the back-end ratio (including all debts) should stay at or below 36%.
Front-End Ratio (28%)
Maximum housing costs (PITI: Principal, Interest, Taxes, Insurance)
Example: $6,667 × 0.28 = $1,867 maximum
Back-End Ratio (36%)
Total debt obligations including housing and other debts
Example: $6,667 × 0.36 = $2,400 maximum
Home Affordability Formula
Maximum Home Price Formula:
Monthly Payment Calculation:
Factors That Reduce Affordability
High Debt Payments
Auto loans, student loans, and credit cards reduce borrowing capacity by up to $10,000 for every $100 of monthly debt
Low Credit Score
A credit score below 700 can increase interest rates by 1-2%, reducing buying power by $30,000-$50,000
High Property Taxes
States like New Jersey (2.23%) and Illinois (2.08%) reduce affordability by $75,000+ compared to low-tax states
Small Down Payment
Less than 20% down requires PMI ($100-$500/month), reducing your price range by $15,000-$50,000
Rising Interest Rates
Every 1% rate increase reduces affordability by 8-10%. A 7% vs 6% rate means $35,000 less buying power
Homeowner Association Fees
HOA fees ($200-$500/month) count toward your front-end ratio, reducing your mortgage capacity significantly
Strategies to Increase Home Affordability
1. Pay Down High-Interest Debt First
Eliminating $500 in monthly debt payments increases your home buying power by $50,000-$75,000. Focus on credit cards and auto loans first, as these have the highest monthly payments relative to balances. A $10,000 credit card debt at 20% APR typically costs $200-300/month—paying this off adds $45,000 to your affordability.
2. Increase Your Down Payment
Every additional $5,000 in down payment increases affordability by roughly $25,000. A 20% down payment eliminates PMI ($100-500/month), frees up hundreds for your mortgage payment, and often secures better interest rates. Consider down payment assistance programs—over 2,000 programs nationwide offer grants up to $50,000 (average $12,000).
3. Improve Your Credit Score
Boosting your credit score from 660 to 740 can lower your interest rate by 0.75-1.5%, increasing affordability by $25,000-$50,000. Pay all bills on time, keep credit utilization below 30%, and correct any errors on your credit report. Avoid opening new credit accounts or making large purchases within 6 months of applying for a mortgage.
4. Consider Different Loan Terms or Programs
First-time buyer programs (FHA, VA, USDA) allow down payments as low as 0-3.5% with more flexible DTI ratios. However, conventional loans often offer better rates for borrowers with good credit (680+). Adjustable-rate mortgages (ARMs) offer lower initial rates but carry long-term risk. Calculate the total 5-year cost, not just monthly payments.
5. Increase Your Income or Add a Co-Borrower
A $5,000 annual raise increases affordability by approximately $15,000. Adding a co-borrower with good credit and stable income can dramatically increase buying power but also their responsibility for the debt. Consider a side income or bonus structure that has been consistent for 2+ years—most lenders can count this toward qualifying income.
6. Choose Lower-Cost Areas
Property values vary dramatically by location. A home 30 minutes further from downtown or in a neighboring school district can cost $100,000 less while maintaining quality of life. Research areas with lower property tax rates—moving from Illinois (2.08%) to Indiana (0.85%) on a $300,000 home saves $370/month, increasing affordability by $60,000.
Budgeting Beyond the Mortgage Payment
Smart home affordability planning extends beyond the mortgage payment to include all homeownership costs. The "true cost" of homeownership typically adds 40-50% on top of your mortgage payment.
| Expense Category | Typical Cost | Annual Impact |
|---|---|---|
| Property Taxes | 1.0 — 2.5% of home value | $3,000 — $10,500 |
| Homeowner's Insurance | $100 — $300/month | $1,200 — $3,600 |
| Utilities | $200 — $400/month | $2,400 — $4,800 |
| Maintenance & Repairs | 1 — 3% of home value | $3,000 — $15,000 |
| HOA Fees (if applicable) | $100 — $500/month | $1,200 — $6,000 |
| Total Additional Costs | $10,800 — $39,900 |
Real-World Examples
Sarah & Mike: First-Time Buyers
Income: $90,000/year combined
Debts: $500/month (student loans)
Down Payment: $25,000 (saved over 3 years)
Affordable Range: $310,000 — $350,000
Monthly payment: $2,200 — $2,450 (31-34% DTI)
They purchased a $335,000 condo with 3% down using an FHA loan. Monthly payment: $2,340. They're comfortable with the payment while still saving $600/month.
The Johnson Family: Move-Up Buyers
Income: $165,000/year
Debts: $1,200/month (two car loans)
Down Payment: $85,000 (home equity)
Affordable Range: $580,000 — $650,000
Monthly payment: $3,800 — $4,250 (28-31% DTI)
They sold their starter home for $420,000 and upgraded to a $615,000 house. Monthly payment: $4,120. No PMI due to 14% down payment. They're meeting all financial goals comfortably.
Location Matters: Regional Affordability Examples
Home affordability varies dramatically by location. Here's what $80,000/year income affords in different markets (2025):
San Francisco, CA
$0 - $0
Median home: $1.2M — requires $250K+ income
Austin, TX
$280,000 - $320,000
Median home: $485,000 — competitive market
Columbus, OH
$340,000 - $380,000
Median home: $295,000 — very affordable
Denver, CO
$260,000 - $300,000
Median home: $565,000 — challenging market
Phoenix, AZ
$310,000 - $350,000
Median home: $425,000 — moderate market
Raleigh, NC
$330,000 - $370,000
Median home: $395,000 — growing market
Key Takeaways
- •The 28/36 rule is the foundation of responsible affordability—never exceed these ratios
- •Every $100 in monthly debt reduces your buying power by $10,000-$15,000
- •A 20% down payment eliminates PMI and typically secures better interest rates
- •Total homeownership costs add 40-50% to your mortgage payment for taxes, insurance, and maintenance
- •Location significantly impacts affordability—same income buys vastly different homes in different markets
About the Author
Marko Hrvojević
Finance Expert, CPA with 12+ years in mortgage lending and financial planning
Connect with MarkoFrequently Asked Questions
What is a good debt-to-income ratio for buying a house?
Lenders prefer a front-end DTI (housing costs only) of 28% or less and a back-end DTI (all debts) of 36% or less. Some loan programs allow up to 43-50% back-end DTI, but financial experts strongly recommend staying at or below 36% to maintain financial flexibility and avoid becoming house poor.
How much house can I afford with a $75,000 salary?
With a $75,000 annual salary ($6,250 monthly gross), you can afford approximately $250,000-285,000 in home price, depending on your down payment, other debts, and local property taxes. This assumes a 7% interest rate, $25,000 down payment, and keeps your housing costs at 28% of income ($1,750/month). Use our calculator with your specific debt situation for a precise estimate.
Does the 28/36 rule include property taxes and insurance?
Yes, the 28% front-end ratio includes your total monthly housing costs: principal, interest, property taxes, homeowners insurance, PMI (if applicable), and HOA fees. The 36% back-end ratio includes all of these housing costs plus your other monthly debt payments like car loans, student loans, and credit cards.
How does PMI affect home affordability?
Private Mortgage Insurance (PMI) typically costs 0.5-1.5% of the loan amount annually. On a $300,000 home with 5% down ($285,000 loan), PMI could add $120-360 to your monthly payment. This effectively reduces your maximum home price by $20,000-50,000. The only way to avoid PMI is putting down 20% or more, or using certain first-time buyer programs.
Should I use gross or net income for affordability calculations?
Always use gross income (before taxes and deductions) for mortgage affordability calculations. This is what lenders use and allows for consistent comparisons. However, for your personal budgeting, calculate what the monthly payment means in take-home pay terms—a $2,000 monthly payment requires about $2,600-2,800 in gross income for most people, but only you know your specific tax situation and other deductions.
Related Calculators
Explore more tools in Loans & Mortgages
Auto Loan Calculator: Monthly Payment & Total Cost (2025)
Free auto loan calculator estimates monthly payments, total interest, and amortization. Compare new vs used cars, down payment impacts, and current 2025 rates.
Auto Loan Payoff Calculator: Calculate Early Payoff Savings & Interest Reduction
Free auto loan payoff calculator shows how much you'll save by paying off your car loan early. See interest savings, months reduced, and new payoff date. Includes prepayment penalty considerations.
Auto Loan Refinance Calculator: Free Car Loan Refinancing Tool & Savings Estimator
Use our auto loan refinance calculator to see how much you can save by refinancing your car loan. Compare current vs new rates, calculate monthly savings, and determine if refinancing makes financial sense.
Boat Loan Calculator: Free Marine Financing & Payment Calculator
Free boat loan calculator with 2025 rates. Calculate monthly payments, total interest, and understand marine financing requirements including surveys and documentation.
Bridge Loan Calculator: Estimate Monthly Costs and Rates
Use our bridge loan calculator to estimate interest‑only payments and total cost for short‑term financing. Model rate, fees, and term. Get instant results.
Cash-Out Refinance Calculator: Estimate Your Home Equity & New Payment (2025)
Free cash-out refinance calculator estimates how much equity you can access, new monthly payment, and total costs. Includes LTV limits, closing costs, and 2025 guidelines.