What This Calculator Does
Before you start shopping for a home, you need a hard number. This house affordability calculator uses your income, existing debts, and down payment to estimate the maximum home price you can realistically afford based on standard lending guidelines.
As of July 2026, the average 30-year fixed mortgage rate sits around 6.57%, according to Freddie Mac data. That is down from the 7.5% peak seen in late 2023 but still well above the sub-3% rates of 2021. At these rates, affordability is tight. A buyer who could afford a $450,000 home at 3% might only qualify for a $310,000 home at 6.5%, even with the same income. This calculator accounts for the full picture: mortgage principal and interest, property taxes, and homeowners insurance. It gives you a realistic estimate of total monthly housing costs so you can shop with confidence.
If you already have a target home price and want to see the monthly payment breakdown, use our Mortgage Calculator instead. And if you are trying to figure out whether buying makes more sense than continuing to rent, our Rent vs. Buy Calculator compares the true cost of both options side by side.
Inputs Required
- Annual Gross Income: Your total income before taxes
- Monthly Debt Payments: All current recurring debt obligations (car loans, student loans, credit cards)
- Down Payment: The cash amount you have available to put toward the purchase
- Interest Rate: The expected mortgage interest rate
- Loan Term: Your preferred repayment period
- Property Tax Rate: Annual property tax as a percentage of home value
- Home Insurance: Estimated monthly homeowners insurance cost
Outputs Provided
- Maximum Home Price: The highest price you can afford based on your inputs
- Maximum Loan Amount: How much you can borrow
- Estimated Monthly Payment: Total housing cost including principal, interest, tax, and insurance
- Debt-to-Income Ratio: Your DTI with the new mortgage included
How the Calculation Works
Lenders use two key ratios to determine affordability. The front-end ratio measures housing costs against gross monthly income. The back-end ratio measures all debt, including housing, against gross monthly income. Together, these form the 28/36 rule.
Front-End Ratio = Housing Costs / Gross Monthly Income
Back-End Ratio = (Housing Costs + All Debts) / Gross Monthly Income
The front-end ratio should generally not exceed 28%. The back-end ratio should stay below 36% for conventional loans. That said, many conventional lenders now approve loans with back-end DTI up to 43%, and some go as high as 50% for borrowers with strong credit scores and large cash reserves. FHA loans allow back-end DTI up to 50%. The Consumer Financial Protection Bureau requires lenders to evaluate a borrower's ability to repay under the 28/36 framework as a baseline, but compensating factors give lenders flexibility.
This calculator takes the lower of both limits to determine your maximum monthly housing budget, then works backward to find the maximum loan and home price that fits within that budget. To understand your current debt burden before running the numbers, check our Debt-to-Income Ratio Calculator.
How to Use the Calculator
- Enter your annual gross income (before taxes, not take-home pay)
- Add all monthly debt payments: car loans, student loans, credit card minimums, child support, personal loans
- Enter your available down payment. If you are still saving, our Down Payment Calculator can help you plan
- Set the expected interest rate. As of mid-2026, 6.5% is a reasonable estimate for a 30-year fixed with good credit
- Choose your loan term. 30-year is most common, but 15-year rates run about 0.5% to 0.75% lower
- Adjust property tax rate and insurance to match your target area. Property taxes vary wildly: New Jersey averages 2.23%, while Hawaii sits at 0.32%
- Read your maximum home price and estimated monthly payment
Example Calculations
Example 1: Single Buyer in a Mid-Cost Market
Rachel, a 32-year-old marketing manager in Charlotte, North Carolina, earns $85,000 per year. She has $400 in monthly debt payments (a car loan and minimum credit card payment) and has saved $25,000 for a down payment. At 6.5% interest on a 30-year loan, with 1.1% property taxes and $1,500/year insurance:
- Monthly gross income: $7,083
- 28% front-end limit: $1,983 for housing
- 36% back-end limit: $2,550 total debt, minus $400 existing = $2,150 for housing
- Binding limit: $1,983 (the 28% rule is tighter)
- Estimated max home price: approximately $285,000
Example 2: Dual-Income Couple in a High-Cost Area
David and Maria, a couple in Denver, earn a combined $160,000 per year. They have $900 in monthly debt payments and $80,000 saved for a down payment. At 6.75% interest on a 30-year loan, with 0.9% property taxes and $2,400/year insurance:
- Monthly gross income: $13,333
- 28% front-end limit: $3,733 for housing
- 36% back-end limit: $4,800 total debt, minus $900 existing = $3,900 for housing
- Binding limit: $3,733 (the 28% rule is tighter)
- Estimated max home price: approximately $540,000
In Denver's market, where the median home price is around $575,000, this couple would need to either increase their down payment, reduce existing debt, or consider a slightly lower rate to afford the median. This is the kind of gap the calculator exposes before you fall in love with a house you cannot buy.
Real World Scenarios
Self-Employed Buyer with Variable Income
Sarah is a freelance graphic designer whose income fluctuates between $60,000 and $95,000 per year. She wants to buy a $350,000 home in Austin, Texas. Lenders typically average self-employment income over two years, so they will use roughly $77,500 as her qualifying income. With $250 in monthly student loan payments and $35,000 down, the calculator shows she can afford about $290,000 at current rates. She needs to either save a larger down payment or wait for rates to drop below 6% to reach her target.
Buyer with High Student Loan Debt
Marcus earns $72,000 as a physical therapist but carries $650 in monthly student loan payments on $85,000 of debt. He has $20,000 saved. The calculator shows his back-end DTI is the binding constraint: 36% of his $6,000 monthly gross is $2,160, minus $650 in student loans leaves only $1,510 for housing. That supports a home price of roughly $215,000 at 6.5%. If he pays down his student loans by $15,000 first, his monthly payment drops to about $500, freeing up $150 more per month for housing and raising his max price to around $240,000.
Relocation with Cost-of-Living Adjustment
Priya moves from Ohio to California for a promotion. Her salary jumps from $95,000 to $130,000, but California property taxes and insurance are higher. She has $50,000 for a down payment. Running the calculator with California's 0.75% property tax rate and $2,800/year insurance, she finds her max home price is about $410,000. In her Ohio market, the same income supported a $380,000 home. The raise helps, but California's higher insurance and home prices eat most of the gain. She decides to rent for a year and save more before buying.
Common Mistakes to Avoid
- Using take-home pay instead of gross income: Lenders use gross income (before taxes) for affordability calculations. Your take-home pay is lower, so your real budget is tighter than the calculator suggests
- Forgetting property taxes and insurance: These can add $300 to $800 per month depending on your location. Florida homeowners pay an average of $4,200 per year in insurance alone in 2026
- Ignoring PMI: If your down payment is less than 20%, you will pay private mortgage insurance. PMI typically costs 0.5% to 1.5% of the loan amount per year. On a $300,000 loan, that is $125 to $375 per month
- Not budgeting for maintenance: Homeownership costs typically 1% to 2% of the home value per year. A new roof runs $8,000 to $15,000. An HVAC replacement is $5,000 to $10,000. These are not optional expenses
- Maxing out your budget: Just because you qualify for a certain amount does not mean you should spend it. Financial advisors often recommend targeting 25% of gross income for housing, not the full 28%, to leave room for savings and emergencies
Limitations of This Calculator
This calculator provides an estimate based on the inputs you enter. It does not include PMI, HOA fees, or closing costs, all of which affect your real monthly payment and upfront cash needs. It also does not factor in your credit score, which directly impacts the interest rate you will qualify for. A borrower with a 660 credit score might pay 0.5% to 1% more than someone with a 740+ score, reducing affordability by roughly 10%. For a complete picture of your loan options, talk to a licensed mortgage lender and compare offers from at least three sources. You can also use our APR Calculator to compare the true cost of different loan offers including fees.
Authoritative Research & Resources
- CFPB Owning a Home Guide - The Consumer Financial Protection Bureau's resource for homebuyers, including interactive tools for comparing Loan Estimates and understanding closing costs. Helps you identify which fees to include in your affordability calculation.
- Freddie Mac Primary Mortgage Market Survey - The authoritative weekly survey of mortgage rates across the United States. Updated every Thursday with current 30-year and 15-year fixed rates, plus 5/1 ARM rates. Use this to set a realistic interest rate input in the calculator.
- HUD Homebuying Resources - The U.S. Department of Housing and Urban Development provides guidance on affordability, down payment assistance programs, and FHA loan requirements. Particularly useful for first-time buyers who may qualify for state or local assistance programs.