Home Affordability Calculator

How to Use the Calculator

Our Home Affordability Calculator estimates the maximum home price you can comfortably afford based on your financial inputs:

• Gross Annual Income: Your total yearly earnings before taxes.
• Total Monthly Debt Payments: Includes car loans, student loans, credit cards, etc.
• Down Payment Available: Cash you can put toward the home purchase.

Mortgage & Housing Estimates

• Estimated Interest Rate: Expected mortgage interest rate (e.g., 6.5%).
• Loan Term: Select the loan period, commonly 30 or 15 years.
• Estimated Annual Costs: Property taxes, homeowners insurance, PMI rate, and HOA dues (if applicable).

Affordability Ratios

• Front-End DTI: The percentage of income allocated to housing costs.
• Back-End DTI: Total debt payments (including mortgage) as a percentage of income.

After you click “Calculate Affordability,” the tool shows:

• Estimated Home Price You Can Afford
• Estimated Monthly PITI (Principal, Interest, Taxes, Insurance)
• Breakdown of P&I, PMI, and other costs

Understanding the Results

In this example, based on U.S. averages:

• Annual Income: $75,000
• Monthly Debts: $1,200
• Down Payment: $15,000
• Interest Rate: 6.5% (30-year loan)
• PMI: 0.5%

Results in:

• Affordable Home Price: Approximately $235,000
• Estimated Monthly PITI: Around $1,275
• Loan Amount: $220,000 + $15,000 down

These figures are based on national average inputs and industry-standard DTI benchmarks, providing a realistic snapshot for many homebuyers.

Tips to Increase Affordability

• Increase Down Payment: Reduces loan size and eliminates PMI if over 20%.
• Pay Down Debt: Lowers your DTI, which improves affordability.
• Improve Credit Score: Helps secure a better interest rate.
• Shop Around: Compare lenders for competitive rates and fees.

Try the calculator now to discover your realistic price range and plan your next steps with confidence.

FAQ:
Q: What is DTI and why does it matter?
A: DTI (Debt-to-Income) ratios determine how much of your income goes toward debt and housing, influencing how much you can borrow.
Q: Can I change the default DTI ratios?
A: Yes, the advanced section lets you customize DTI settings to fit your situation.
Q: Does this calculator include taxes and insurance?
A: Yes, you can input estimates to see their impact on your affordability.
Q: Is this an official loan approval?
A: No, it’s an estimate. Pre-approval from a lender is needed to determine your actual budget.