This house affordability calculator estimates a home price you might support from gross monthly income, monthly debts, mortgage rate, term, a max DTI percent, and down payment cash. It sizes payment room first, then converts that payment into a loan and adds down payment.
Shoppers use it before touring so list prices stay inside a payment budget. Continue with the mortgage calculator for payment detail and the rent vs sell calculator when comparing paths.
How the formula works
Max payment = income × (DTI÷100) – debts. That payment amortizes into a loan at the rate and term. Affordable price ≈ loan + down payment.
Worked example
Income $7,000, debts $500, rate 6.5 percent, 30 years, DTI 36 percent, down $40,000. Max payment = 7,000 × 0.36 – 500 = $2,020. Affordable price ≈ $359,585.86.
| Input | Value |
|---|---|
| Gross monthly income | $7,000 |
| Monthly debts | $500 |
| Mortgage rate | 6.5% |
| Term | 30 years |
| Max DTI % | 36% |
| Down payment | $40,000 |
| Affordable price | ~$359,585.86 |
How to use the fields
- Income is gross monthly earnings.
- Debts are required monthly debt payments already on your budget.
- Rate and years set the mortgage amortization.
- DTI is the max percent of income allowed for debts plus the housing payment room.
- Down payment is cash equity you can bring.
Payment room first
Lower debts free more of the DTI budget for housing. Paying down a car loan can raise the affordable price even when income stays flat. Run before and after payoff scenarios.
Rate sensitivity
Higher rates shrink the loan a fixed payment can support. When rates move, re run this page before you stretch an offer. A half point change can move the price ceiling by tens of thousands in some cases.
Common mistakes
- Entering annual salary in the monthly income field
- Leaving out student loans or minimum card payments
- Treating the result as cash to close
- Ignoring taxes, insurance, and HOA above P&I
Buyer checklist
- Total verified gross monthly income.
- List every minimum debt payment.
- Pick a rate near current quotes.
- Keep reserves after the down payment.
Comfort versus max
Lenders may approve near the DTI cap while your sleep comfort sits lower. Model a stricter DTI, such as 30 percent, and prefer the payment you could carry through a repair month.
Taxes, insurance, and HOA cushions
Because the model treats payment room as principal and interest capacity, real housing cost is higher after taxes, insurance, and HOA dues. After you get a price estimate, subtract a monthly tax and insurance allowance and see whether the leftover P&I still supports that price. If not, lower the target.
High insurance areas and older roofs change the cushion you need. Price the insurance early, not after you fall in love with a listing.
Variable income and bonuses
Lenders may haircut overtime, bonuses, or self employment income. Enter only the income you can document for underwriting. Running an optimistic bonus case and a base salary case keeps expectations honest.
Two income households should test a one income stress case for a few months of payment room. Job loss risk is not in the formula but belongs in the plan.
Down payment strategy
A larger down payment raises the affordable price for the same payment room because less loan is needed. It also depletes cash reserves. Balance the price ceiling against emergency savings so you do not win the house and lose the buffer.
Offer strategy inside the ceiling
Treat the affordable price as a ceiling, not a target to hit on every tour. Bidding contests can push you over the line after inspection credits fall through. Leave room so a small price bump or rate lock change does not break the budget.
Ask your agent for recent sold comps near your payment comfort zone, not only near the maximum the formula prints.
Closing cash beyond the down payment
Affordable price estimates can ignore thousands of dollars due at closing. Title fees, prepaid taxes, and insurance impounds need a separate cash stack. After you like a price from this page, estimate cash to close so you do not empty reserves on day one.
Gift funds can help but require letters and seasoning rules. Start that paperwork early.
Limitations
Estimates ignore property taxes, insurance, HOA, and mortgage insurance. They are not a preapproval. Use lender worksheets for official buying power, then verify payment with mortgage tools linked above.