How Much House Can I Afford?
Lenders approve on debt-to-income ratios, not on what feels comfortable. Enter your income, your existing debts and your down payment, and this calculator solves backwards for the home price that fits — including property tax, insurance and PMI.
Price by debt-to-income ceiling
Most conventional lenders cap total debt at 43%–45% of gross monthly income, though automated underwriting can approve up to 50% with compensating factors. The 36% scenario is the old 28/36 rule, which leaves more room for savings and repairs.
What that payment buys
- Principal & interest $0
- Property tax $0
- Insurance $0
- HOA $0
- PMI $0
Debt-to-income is the number that decides
Lenders add up the housing payment you would owe — principal, interest, property tax, insurance, HOA dues and mortgage insurance — plus every other monthly debt on your credit report, then divide by gross monthly income. That is the back-end DTI, and it is the main constraint on approval.
Two thresholds matter in practice. At 43% you are inside the standard qualified-mortgage box, which is where most approvals land. At 36% you have room for the costs that never appear in a loan estimate: maintenance, repairs, furniture, and the possibility of an income change. The gap between those two scenarios is not small — on a $120,000 income it is often $80,000–$120,000 of home price.
What counts as a debt
- Counted: car loans, student loans, minimum credit card payments, personal loans, child support, and any new mortgage payment.
- Not counted: rent you are leaving, utilities, groceries, insurance premiums unrelated to the house, and subscriptions. They still affect your budget, just not your DTI.
- Sometimes counted: deferred student loans in forbearance, co-signed loans, and installment debt with fewer than ten payments left (some underwriters exclude these).
The down payment trade-off
A larger down payment lowers the loan amount and can eliminate PMI, which increases the price you can afford. But down payments have a second effect that this calculator cannot show: they consume cash. Closing costs run 2%–5% of the price, moving costs another 1%, and a new home usually needs something in the first year. Keeping three to six months of expenses in reserve matters more than shaving 0.3% off the rate.
At 20% down you avoid PMI entirely. Between 5% and 19.99% you pay it, typically 0.3%–1.5% of the loan per year, until the balance reaches 80% of the original value. On a $420,000 loan at 0.55%, that is about $193 a month — enough to change the answer by $30,000 or more.
What this calculator leaves out
It solves for a purchase price given a monthly housing budget. It does not model closing costs, prepaid taxes and insurance, HOA move-in fees, or lender reserve requirements — all of which are cash you need on top of the down payment. It also assumes a fixed rate and a single income; variable income, self-employment and rental income are underwritten differently.
Approval is not affordability. A lender will approve you at 43% DTI. That does not mean a third of your income going to a house leaves enough for childcare, retirement contributions or an emergency fund. Run the 36% scenario as your planning number and treat 43% as the ceiling.
Affordability FAQ
The questions behind the number.
How much house can I afford on a $100,000 salary?
At a 43% DTI ceiling with $500 of monthly debt, gross monthly income is $8,333 and the housing budget is about $3,083. With 20% down at 6.5%, 1.1% property tax and 0.35% insurance, that supports roughly a $493,000 home. At the 36% ceiling the same income supports about $416,000. Enter your own numbers above for the exact figures.
Should I use 36% or 43% DTI?
Use 36% for planning and 43% only if you have a specific reason to stretch — a stable dual income, a large emergency fund, or a market where waiting costs more than stretching. The difference in price is real, but so is the difference in monthly breathing room.
Do student loans count against my mortgage?
Yes. Lenders use the required monthly payment, or 1% of the balance if the loan is in deferment or income-driven repayment with a $0 payment. A $60,000 student loan can therefore count as $600 a month of debt even if you currently pay nothing.
How does a bigger down payment change the answer?
Two ways: it reduces the loan amount for any given price, and it can remove PMI at 20%. In this model, going from 10% to 20% down raises the affordable price by roughly 8%–12%, depending on how much of the budget was going to mortgage insurance.
What income do lenders use for self-employed borrowers?
Qualifying income is usually the two-year average of net profit after business expenses, taken from tax returns — not gross revenue and not the amount you pay yourself. If your income grew sharply in the most recent year, most underwriters still average it with the prior year.
Does this include closing costs?
No. Plan on 2%–5% of the purchase price for lender fees, title, appraisal, recording and prepaid escrow. On a $450,000 home that is $9,000–$22,500 in cash beyond the down payment, and it is the most common reason a pre-approved buyer loses a house.
Related calculators
Turn the price into a payment, then into a plan.
Affordability estimates are for planning only. Actual approval depends on credit history, employment verification, reserves, property condition and the lender's own underwriting. Property tax and insurance are estimated as a percentage of price and vary widely by location.