Wondering how much house you can afford? Our House Affordability Calculator helps you estimate a realistic maximum home price by weighing your income, monthly debts, down payment, interest rate, property taxes, insurance, HOA dues, and debt-to-income (DTI) limits.
How the House Affordability Calculator works
This calculator balances two common lending guidelines: the front-end DTI ratio (the percentage of your gross income that can go to your housing payment) and the back-end DTI ratio (your housing payment plus all other monthly debts). It also accounts for key ownership costs beyond principal and interest, such as property taxes, homeowners insurance, and HOA dues. If your down payment is below 20%, the calculator can include private mortgage insurance (PMI) to reflect the higher monthly cost.
Behind the scenes, your allowable monthly housing budget is determined by the smaller of the two DTI limits. That budget is then broken down into five components:
- Principal and interest on the mortgage
- Property taxes
- Homeowners insurance
- HOA dues (if applicable)
- PMI (if your down payment is under 20%)
What inputs you need
To get a reliable result, gather the following:
- Annual gross income
- Monthly non-housing debts (credit cards, auto, student loans, etc.)
- Down payment amount
- Loan term (typically 15 or 30 years)
- Mortgage interest rate (APR)
- Local property tax rate
- Estimated annual homeowners insurance
- Monthly HOA dues (if any)
- PMI rate if down payment is below 20%
Why DTI ratios matter
Most lenders use DTI ratios to assess risk and ensure borrowers can comfortably manage their payments. A common starting point is a 28% front-end DTI and a 36% back-end DTI, though actual limits vary by loan program and borrower profile. If your other debts are high, the back-end DTI may be the binding constraint and will reduce the home price you can afford.
Taxes, insurance, and HOA are part of the payment
It is easy to focus on the mortgage alone, but ownership costs also include property taxes, homeowners insurance, and possibly HOA dues. These can add hundreds of dollars per month, so factoring them in prevents overestimating your budget. Our calculator uses your property tax rate to model taxes as a percentage of the home price and spreads annual insurance across monthly payments.
Tips to increase how much house you can afford
- Boost your down payment to reduce the loan amount and potentially eliminate PMI.
- Pay down high-interest debts to free up back-end DTI capacity.
- Shop around for lower mortgage rates and insurance premiums.
- Consider homes with lower tax rates or HOA dues.
- Choose a longer loan term to lower the monthly principal and interest (note the tradeoff in total interest paid).
Important caveats
The House Affordability Calculator provides a planning estimate. Real-world underwriting can differ based on credit score, loan program (conventional, FHA, VA, USDA), reserves, and local property assessments. PMI rules also vary by lender and may change as you build equity. Always confirm numbers with a lender before making a decision.
Next steps
- Enter your information and run the calculator.
- Adjust assumptions (rate, taxes, insurance) to see how affordability changes.
- Get preapproved with a lender to validate your budget and lock in a rate.
- Work with a local agent to target homes within your comfort range.
By incorporating the most important factors into one calculation, the House Affordability Calculator helps you set clear expectations, compare scenarios, and shop confidently within a realistic price range.