How Much House Can You Afford?
Enter your income, debts, and savings to calculate the maximum home price you can comfortably afford — with a comfort gauge to match your risk tolerance.
How Much House Can I Afford? A Complete Guide
Buying a home is likely the single largest financial decision you'll ever make. Understanding how much house you can truly afford — not just what a lender will approve you for — is the critical first step toward sustainable homeownership. Our home affordability calculator uses your real financial data to back-calculate the maximum home price that fits your budget without stretching you dangerously thin.
Understanding the Debt-to-Income Ratio (DTI)
Lenders use two key ratios when evaluating your mortgage application. The front-end DTI (also called the housing ratio) measures what percentage of your gross monthly income goes toward housing costs — principal, interest, taxes, and insurance (PITI). Most lenders prefer this to stay at or below 28%. The back-end DTI adds all your other recurring debts (car payments, student loans, credit cards) into the mix, and lenders typically want this total under 36%, though FHA loans may allow up to 43% or higher in some cases.
Our calculator focuses on the back-end DTI, since it gives you the most realistic picture of what you can handle. We subtract your existing monthly debt payments from the total allowable debt service to determine how much room is left for a mortgage payment, then work backwards to find the maximum loan — and therefore the maximum home price.
The 28/36 Rule Explained
The 28/36 rule is the gold standard guideline used by conventional lenders. It states that you should spend no more than 28% of your gross monthly income on housing costs and no more than 36% on total debt service. While this is a guideline rather than a hard rule, staying within these boundaries significantly reduces the risk of becoming "house poor" — a situation where your mortgage consumes so much of your income that you can't save, invest, or enjoy life.
Conservative vs. Moderate vs. Aggressive
Our comfort gauge helps you visualize where your affordability lands on the risk spectrum. A conservative approach keeps your housing DTI under 28%, giving you ample room for savings and unexpected expenses. A moderate approach extends to 33%, which most financial advisors still consider manageable. An aggressive approach pushes to 36% or beyond, which can work if you have excellent job security and few other expenses, but leaves little margin for error. Keep in mind that pre-approval amounts from lenders often reflect an aggressive stance, so it's wise to buy below what you're approved for.
Factors That Affect Your Affordability
Beyond income and debts, several factors influence how much home you can afford. Interest rates have a massive impact — even a 1% rate increase can reduce your buying power by 10-12%. Property tax rates vary dramatically by location, from under 0.5% in Hawaii to over 2% in New Jersey and Illinois. Private mortgage insurance (PMI) is required when your down payment is less than 20%, typically adding 0.5% to 1% of the loan amount annually. And your down payment itself determines not only the loan size but whether you'll owe PMI. All these variables flow through our calculator to give you an accurate maximum home price.
Tips for Improving Your Affordability
If your maximum home price feels lower than expected, there are several actionable steps you can take. Paying down existing debts reduces your back-end DTI, freeing up room for a larger mortgage payment. Increasing your down payment directly raises the home price you can reach. Shopping for a lower interest rate — even a quarter-point difference — compounds over 30 years. And boosting your income through raises, side hustles, or a co-borrower can meaningfully expand your buying power. Use the sliders above to model any of these scenarios instantly.
Frequently Asked Questions
On a $75,000 annual salary with moderate debts and a 30-year mortgage at current rates, most borrowers can afford a home in the $250,000–$350,000 range. Use the calculator above with your specific debts, down payment, and local tax rate for a personalized number. The 28/36 rule suggests keeping your total housing payment under $1,750/month and total debts under $2,250/month.
The 28/36 rule states that your total housing costs (mortgage, taxes, insurance) should not exceed 28% of your gross monthly income, and your total monthly debt payments (including housing) should not exceed 36%. This guideline helps ensure you have enough income left for savings, emergencies, and everyday expenses.
Yes. If your down payment is less than 20% of the calculated home price, the calculator automatically factors in private mortgage insurance (PMI) at a rate of 0.7% of the loan amount per year. PMI protects the lender and is required for conventional loans with less than 20% down. This reduces your effective buying power since part of your allowable payment goes to PMI instead of principal and interest.
Financial advisors generally recommend buying below your maximum. Staying in the "conservative" zone (28% housing DTI) gives you breathing room for home repairs, lifestyle changes, market downturns, or interest rate increases on adjustable-rate mortgages. A common recommendation is to target 2.5–3× your annual income as the home price, though this varies by location and individual circumstances.
A larger down payment increases affordability in two ways: it directly adds to the home price you can reach (since max home = max loan + down payment), and if it exceeds 20%, it eliminates the need for PMI — freeing up more of your monthly budget for principal and interest. For example, going from 10% to 20% down on a $300,000 home saves roughly $100–$175/month in PMI alone.
This calculator is for educational purposes only. Results are estimates and should not be considered financial advice. Actual loan approval depends on credit score, employment history, and lender-specific criteria. Consult a qualified financial advisor or mortgage professional for personalized guidance.