FinCompute

Home Affordability Calculator

Calculate how much house you can afford based on your annual income, down payment, monthly debts, and local property taxes.

Last updated: July 2026

Income & Savings

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Taxes, Fees & Insurance
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* **Front-End Ratio**: The maximum percentage of gross income going to housing expenses (PITI). Standard is 28%.
* **Back-End Ratio**: The maximum percentage of gross income going to all debt obligations combined. Standard is 36%.

Affordable Price

$384,100

Affordable Loan

$344,100

Monthly Budget

$2,800

Housing Payment Breakdown (PITI)

How Much House Can You Truly Afford?

Lenders determine how much you *can* borrow, but only you can decide how much you *should* spend. Realistic budgeting ensures you build home equity without becoming house-poor.

The 28/36 Rule and Down Payment Sizing

Conservative financial planning advises limiting housing costs to 28% of gross monthly income, and total debt obligations to 36%. A down payment of 20% or more protects you against market downturns, secures superior interest rates, and eliminates Private Mortgage Insurance.

Max Home Budget Formula

Max Price = (Affordable Loan Principal based on Max Monthly P&I) + Cash Down Payment

Your maximum purchase price is calculated by backing out property taxes, insurance, and HOA dues from your allowable monthly payment budget, and solving for the maximum amortized loan size.

Safeguards Against Overspending

  • Preserve an Emergency ReserveNever deplete all your liquid savings for the down payment; retain at least 3 to 6 months of living expenses after closing.
  • Budget for Immediate RepairsSet aside 1% to 3% of the home price for initial moving costs, furniture, and unexpected post-move repairs.
  • Stress-Test for Rate IncreasesIf considering an adjustable-rate mortgage (ARM), verify that your income can comfortably absorb the maximum possible interest cap.

Frequently Asked Questions

How much income should I spend on a mortgage?

Most financial experts recommend spending no more than 25% to 28% of your gross monthly income on housing costs (the front-end DTI guideline).

How does down payment size impact affordability?

A larger down payment reduces your loan amount, eliminates Private Mortgage Insurance (PMI) if you put down 20%, and lowers your monthly mortgage payment.

How do interest rates affect purchasing power?

Every 1% increase in mortgage interest rates reduces your home purchasing power by roughly 10% for the same monthly payment budget.

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💱Currency Rates: Conversions use static rates (1 USD = 0.92 EUR = 0.79 GBP = 83 INR) for convenience.
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