How to Use This Home Affordability Calculator

1. Enter your Annual Income (gross, before taxes)
2. Enter your Monthly Debts (minimum payments for car loans, credit cards, student loans)
3. Enter your Down Payment amount (cash you’ll put toward the home)
4. Enter the Interest Rate (APR) and Loan Term (15, 20, or 30 years)
5. Enter estimated Property Tax (% of home price per year), Home Insurance ($/year), and HOA fees ($/mo if applicable)
6. Click Calculate — see your maximum affordable home price, monthly PITI, and DTI gauge
7. The gauge shows your total DTI zone: Healthy (≤36%), Caution (36-43%), or High-Risk (43%+)

How Home Affordability is Calculated (28/36 Rule)

This calculator follows standard U.S. lender guidelines — the 28/36 rule:

Housing DTI Limit: 28% of gross monthly income
(PITI = Principal + Interest + Property Tax + Insurance + HOA)
Total DTI Limit: 36% of gross monthly income
(All monthly debts + housing payment) ÷ monthly income ≤ 36%

The calculator applies a 5% safety buffer and solves for the maximum home price you can afford.

Real Example

Inputs:

• Annual Income: $120,000 → Monthly Income: $10,000
• Monthly Debts: $600 (car loan + credit cards)
• Down Payment: $90,000 (20% of purchase price)
• Interest Rate: 6.75%
• Loan Term: 30 years
• Property Tax: 1.2% of home price/year
• Home Insurance: $1,500/year
• HOA: $0

Results:

• Maximum Affordable Home Price: ≈ $450,000
• Monthly PITI: ≈ $2,650 (Principal+Interest ~$2,150 + Tax ~$450 + Insurance ~$125)
• Housing DTI: 26.5% (under 28% limit)
• Total DTI: 32.5% (under 36% limit — Healthy)
• Loan Amount: $360,000 (after $90k down payment)

Why Use This Home Affordability Calculator?

• ✅ Lender-Approved Method — Uses standard 28/36 underwriting guidelines
• ✅ Full PITI Breakdown — See exactly how much goes to Principal, Interest, Taxes, Insurance, and HOA
• ✅ Interactive DTI Gauge — Visual semicircle gauge shows your total debt-to-income zone
• ✅ Conservative 5% Buffer — Prevents overestimating what you can afford
• ✅ 15/20/30 Year Terms — Compare different loan lengths
• ✅ Free & Unlimited — No signup required
• ✅ Mobile Friendly — Responsive design for phones, tablets, and desktops

Frequently Asked Questions

What is the 28/36 rule?

The 28/36 rule is a lender guideline for qualifying for a mortgage:
– 28% of your gross monthly income should be the maximum for housing costs (PITI)
– 36% of your gross monthly income should be the maximum for total debts (housing + other debts)

What’s included in PITI?

P = Principal (loan amount repayment)
I = Interest (cost of borrowing)
T = Property Taxes (annual taxes divided by 12)
I = Homeowners Insurance (annual premium divided by 12)
+ HOA fees if applicable

How much house can I afford with $100k salary?

With 20% down, 6.5% interest rate, no other debts:
– $100k annual income = $8,333/month
– 28% housing limit = $2,333/month PITI
– Approximate affordable home price: $350,000-$400,000
Use this calculator for your exact numbers — down payment and debts change results significantly.

What DTI do I need for a mortgage?

Conventional loans: DTI ≤ 36% preferred, up to 43-45% possible with strong credit
FHA loans: DTI up to 43-50% allowed with compensating factors
VA loans: No fixed DTI limit, but typically under 41%
USDA loans: DTI up to 41-44%

Does the down payment affect affordability?

Yes — significantly. A larger down payment means:
– Lower loan amount → lower monthly payment
– May eliminate PMI (if 20% down)
– Qualify for better interest rates
– Increases your maximum affordable home price

What property tax rate should I use?

Property tax rates vary by location:
– National average: ~1.1% of home value per year
– High-tax states (NJ, IL, TX): 1.5-2.5%
– Low-tax states (HI, AL, CO): 0.3-0.7%
Check local rates or use 1.2% as a starting estimate.

Related Real Estate Calculators

• Mortgage Payment Estimator — Calculate monthly PITI in detail
• Mortgage Refinance Calculator — Should you refinance?
• Debt-to-Income (DTI) Ratio Calculator — Check your DTI without a home
• Property Tax Calculator — Estimate annual property taxes
• Rent vs Buy Calculator — Compare renting vs buying

Disclaimer: This home affordability calculator provides estimates for informational purposes only. The 28/36 rule is a guideline, not a guarantee. Actual mortgage approval depends on credit score, employment history, assets, and lender policies. Consult a mortgage lender or financial advisor for pre-approval.