House Affordability Calculator

What is House Affordability?

House affordability is a financial metric that estimates the maximum home price you can comfortably purchase based on your income, debts, down payment, and other expenses. It's commonly used by homebuyers and lenders to determine a safe price range for buying a house, helping you avoid financial stress and stay within budget.

How to Use the House Affordability Calculator

Type your annual income, down payment, and monthly debts into the fields.
Select or enter your loan term, interest rate, property tax, home insurance, HOA dues, and DTI ratio.
Click or tap the Calculate button.
See your maximum affordable home price and a detailed monthly payment breakdown instantly.

The How To Calculate House Affordability Calculator is free, accurate, and easy to use on any device.

How is House Affordability Calculated? (Formula Explained)

The main formula considers your income, debts, and the maximum debt-to-income (DTI) ratio allowed by lenders:

Max Monthly Payment = (Annual Income / 12) × (DTI / 100) - Monthly Debts

Then, the calculator estimates the highest home price you can afford, factoring in your down payment, loan term, interest rate, property tax, insurance, and HOA dues. It uses a mortgage payment formula and iterates to find the maximum home price that fits your budget.

Monthly Payment = Principal & Interest + Property Tax + Home Insurance + HOA Dues

Where:
Principal & Interest is calculated using the standard mortgage formula:
P & I = [P × r × (1 + r)ⁿ] / [(1 + r)ⁿ - 1]
P = loan amount, r = monthly interest rate, n = total payments.

Example: House Affordability Calculation Step-by-Step

Suppose Jane earns $90,000 per year, has $500 in monthly debts, and a $20,000 down payment. She wants a 30-year loan at 6.5% interest, with 1.2% property tax, $100/month insurance, $0 HOA dues, and a 36% DTI limit.

Max monthly payment = ($90,000 / 12) × 0.36 - $500 = $2,200 - $500 = $1,700
Estimate home price so that total monthly payment (mortgage, tax, insurance, HOA) ≤ $1,700
Calculator finds the max home price Jane can afford is about $315,000

Why House Affordability Matters for You

Knowing your house affordability helps you shop confidently, avoid overextending your finances, and plan for a comfortable future. It's essential for first-time buyers, families, and anyone wanting to make a smart, sustainable home purchase.

Typical House Affordability Ranges

Conservative: Home price ≤ 3× annual income
Standard: Home price ≤ 4–5× annual income (with low debts)
Maximum (with high DTI): Home price up to 5–6× annual income (not always recommended)

Benefits of Tracking Your House Affordability

Prevents you from buying more house than you can afford
Helps you compare homes and set realistic expectations
Improves your chances of mortgage approval
Reduces financial stress and risk of foreclosure
Empowers smarter, data-driven decisions

Limitations of This Calculator

Assumes stable income and debt levels
Does not account for future changes in interest rates or taxes
Excludes some costs (maintenance, utilities, closing costs)
Results are estimates, not guarantees
Consult a financial advisor for personalized advice

FAQs About the House Affordability Calculator

Is house affordability the same as mortgage pre-approval?
No, house affordability is an estimate based on your inputs, while pre-approval is a lender's official offer based on verified documents.
What's a good DTI ratio for buying a house?
Most lenders prefer a DTI of 36% or less, but some allow up to 43% for well-qualified buyers.
How often should I check my house affordability?
Check before starting your home search, after major financial changes, or when interest rates shift.
Does the calculator include property taxes and insurance?
Yes, it factors in property tax, home insurance, and HOA dues for a complete monthly payment estimate.
Can I use this calculator for condos or townhomes?
Yes, just enter the HOA dues if applicable.
Is the How To Calculate House Affordability Calculator free?
Yes, it's 100% free and works on any device.
How accurate is the result?
It's a close estimate, but actual affordability may vary based on lender criteria and local costs.