Home Affordability Calculator
Find out the maximum home price you can afford based on your income, existing debts, down payment, and current interest rates. This calculator uses the standard 43% debt-to-income ratio that lenders require and includes property tax and insurance estimates.
Lenders use the debt-to-income (DTI) ratio to determine how much mortgage you qualify for. The standard maximum DTI is 43%, meaning your total monthly debt payments (including the new mortgage) should not exceed 43% of your gross monthly income. Some loan programs allow up to 50% DTI, but 43% is the conventional benchmark.
Your monthly housing cost includes four components known as PITI: Principal, Interest, Taxes, and Insurance. On a $350,000 home with 20% down ($280,000 mortgage) at 6.75% for 30 years, the monthly breakdown is approximately: $1,816 principal and interest, $350 property tax, and $125 insurance, totaling about $2,291 per month.
The size of your down payment significantly affects affordability. A larger down payment reduces the loan amount and may help you avoid private mortgage insurance (PMI), which is typically required when the down payment is less than 20%. PMI adds 0.5-1% of the loan amount annually. A 20% down payment on a $350,000 home is $70,000 and saves $1,400-$2,800 per year in PMI.