# Home Affordability Calculator

Calculate how much house you can afford based on income, debts, down payment, and interest rates. Free home affordability calculator with PITI breakdown.

## What this calculates

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.

## Inputs

- **Annual Gross Income** ($) — min 0 — Your total annual income before taxes.
- **Monthly Debt Payments** ($) — min 0 — Car loans, student loans, credit card minimums, etc.
- **Down Payment** ($) — min 0 — Amount you have saved for a down payment.
- **Mortgage Interest Rate** (%) — min 0, max 15 — The expected annual mortgage interest rate.
- **Loan Term (years)** — options: 15 years, 20 years, 30 years — The length of the mortgage.
- **Annual Property Tax Rate** (%) — min 0, max 5 — Annual property tax as a percentage of home value.
- **Annual Homeowner's Insurance** ($) — min 0 — Estimated annual homeowner's insurance premium.

## Outputs

- **Maximum Home Price** — formatted as currency — The most expensive home you can afford.
- **Maximum Mortgage Amount** — formatted as currency — The maximum loan amount (home price minus down payment).
- **Estimated Monthly Payment** — formatted as currency — Total monthly housing cost (PITI).
- **Debt-to-Income Ratio** — formatted as percentage — Your total monthly debts including housing as % of income.

## Details

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.

## Frequently Asked Questions

**Q: What debt-to-income ratio do lenders require?**

A: Most conventional lenders require a total DTI ratio of 43% or less. FHA loans may allow up to 50% in some cases. The front-end ratio (housing costs only) should typically not exceed 28-31% of gross income. For a $85,000 income ($7,083/month), 43% DTI allows $3,046 in total monthly debt payments. If you have $500 in existing debts, up to $2,546 can go toward housing.

**Q: How much down payment do I need?**

A: Conventional loans typically require 3-20% down. FHA loans require as little as 3.5%. VA and USDA loans offer 0% down for eligible borrowers. Putting less than 20% down usually requires private mortgage insurance (PMI), adding 0.5-1% of the loan to your annual costs. A larger down payment means a smaller loan, lower monthly payments, and potentially better interest rates.

**Q: How does interest rate affect home affordability?**

A: Interest rate has a dramatic effect on affordability. At 4% on a 30-year mortgage, a $2,000/month payment supports a $419,000 loan. At 7%, that same payment only supports a $301,000 loan -- a $118,000 reduction in buying power. Each 1% increase in rate reduces your purchasing power by approximately 10-12%.

**Q: Should I buy the most expensive house I can afford?**

A: Financial experts recommend spending no more than 28-30% of gross income on housing, even if you qualify for more. Buying at the maximum leaves no room for savings, emergencies, or lifestyle spending. Consider future expenses like maintenance (1-2% of home value per year), utilities, and potential interest rate increases if you have an adjustable-rate mortgage.

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Source: https://vastcalc.com/calculators/finance/home-affordability
Category: Finance
Last updated: 2026-04-21