Home Affordability Calculator

What this calculator does

This home affordability calculator works backward from your income to a purchase price. You enter your annual gross income, your existing monthly debt payments, the interest rate you expect, and how much you plan to put down, and it returns the maximum monthly principal and interest payment you can support, the loan that payment sustains, and the resulting maximum home price.

It also lays out a table across several down payment percentages, so you can see how a 5, 10, 15, or 20 percent down payment moves both the price you can reach and the cash you need at closing. The two move in opposite directions, which is the tension every buyer has to resolve.

When to use it

The most useful moment is before you talk to a lender, so you arrive with your own number rather than adopting theirs. Run it again when something changes your debt picture: paying off a car, taking on a student loan payment that leaves deferment, or a raise that clears probation.

It is also the right tool for the trade-off between clearing debt and saving a deposit. If you have $8,000 and a $450 car payment with a $7,000 balance, the calculator shows whether killing the payment buys more house than adding the cash to your down payment. And it answers the decision not to buy — if the max price sits below your market's entry level, the honest read is to keep renting and revisit.

Understanding the inputs

Annual gross income is your pre-tax total. Include bonus or commission only if you have a two-year documented history, because that is the standard lenders apply. Self-employed borrowers should use net profit from Schedule C, averaged across two years, not gross receipts.

Monthly existing debts means minimum payments on credit-report obligations. Interest rate should be a rate you have actually been quoted for your credit tier, not a headline advertised rate that assumes 780-plus credit and discount points. Down payment is entered as a percentage of price. The 20 percent line matters most: below it you will pay PMI, which is not in this calculation and eats directly into the payment capacity you just computed.

How is this calculated?

Max monthly payment = 28% of gross monthly income minus monthly debts. Back-calculate loan amount from that payment.

A worked example

Take a household earning $110,000 a year with a $450 car payment, quoted 6.5 percent, planning 20 percent down. Gross monthly income is about $9,167, so the 28 percent housing limit is roughly $2,567. Subtracting the car payment leaves about $2,117 for principal and interest.

At 6.5 percent over 30 years, $2,117 a month supports a loan of roughly $334,900, which at 20 percent down implies a home price near $418,600 and $83,700 in cash for the down payment. Pay the car off first and the picture changes sharply: the full $2,567 supports about $406,000 of loan and a price near $507,000. That single $450 payment was costing roughly $88,000 of purchase power.

Limitations and assumptions

This is a payment-capacity model, not an underwriting decision. It does not look at your credit score, your cash reserves, your employment history, or the appraisal — all of which can shrink or kill an approval that the arithmetic supports. Nor does it include property taxes, insurance, PMI, or HOA dues, so the true monthly cost of the max-price home is meaningfully higher than the payment shown.

Property tax rates in particular vary enormously by county, from well under one percent to over two percent of value, which can swing the real payment by hundreds of dollars on the same price. Once you have a target price, get a pre-approval and a Loan Estimate: those account for your actual file, the actual tax bill on the actual parcel, and the closing costs this calculator ignores.