Home Affordability Calculator
Enter your annual income, existing monthly debts, down payment, and target interest rate to estimate the maximum home price you can reasonably afford while keeping your debt-to-income ratio within a healthy range.
How the Home Affordability formula works
Working backward from an affordable monthly payment to a maximum loan and home price:
Max monthly housing payment = (Annual income / 12 × target DTI%) − Existing monthly debts Max loan amount = solved from that payment, the interest rate, and loan term Max home price = Max loan amount + Down payment
Step-by-step calculation
- Multiply annual income by your target debt-to-income ratio (commonly 36%) and divide by 12 to find the maximum total monthly debt payment allowed.
- Subtract existing monthly debt payments to find how much is left for a housing payment.
- Solve the loan amortization formula backward to find the maximum loan amount that payment supports at the given rate and term.
- Add your down payment to the max loan amount for the maximum affordable home price.
Worked example
$95,000 annual income, $500/month existing debt, 6.5% rate, 30-year term, targeting 36% DTI, with a $30,000 down payment: Max monthly debt = 95,000/12 × 0.36 ≈ $2,850. Max housing payment = 2,850 − 500 = $2,350. That supports a loan of roughly $372,000, for a max home price near $402,000.
Frequently asked questions
What DTI ratio do lenders typically use?
36% is a commonly cited general guideline, though many lenders allow up to 43-50% under certain loan programs — this calculator lets you adjust the target ratio to match what you're working with.
Does this include property taxes and insurance?
This estimates the principal-and-interest portion of an affordable payment. Taxes and insurance add to your actual monthly housing cost, so the true affordable loan amount may be somewhat lower once those are factored in.