House Affordability Calculator

What this house affordability calculator does

This calculator estimates a home price that fits a monthly housing budget based on income, existing debt, down payment, interest rate, property tax, HOA dues, and insurance. It uses common debt-to-income limits to cap the housing payment.

The result includes the loan amount, down payment, closing costs, monthly principal and interest, total monthly housing cost, and front-end and back-end DTI ratios.

How to use this calculator

1. Enter your annual household income.
2. Enter the loan term and interest rate.
3. Enter your other monthly debt payments.
4. Enter the down payment as a percentage or dollar amount.
5. Enter property tax, HOA, and insurance as annual percentages of the home price.
6. Choose a DTI rule and click Calculate.

The default example uses a $120,000 income, a 30-year loan at 7.108%, no other debt, a 20% down payment, 1.5% property tax, and 0.5% insurance. It estimates an affordable home price of $397,319.

Affordability formula

The front-end DTI ratio is:

Front-end DTI = Monthly housing cost / Monthly gross income × 100

The back-end DTI ratio is:

Back-end DTI = (Housing cost + other monthly debt) / Monthly gross income × 100

The conventional rule uses a 28% front-end limit and a 36% back-end limit. FHA uses 31%/43%, and VA uses a 41% back-end limit. The calculator caps the monthly housing cost at the lower of the front-end budget and the back-end budget, then solves for the home price that produces that payment.

The monthly payment includes principal, interest, property tax, HOA, and insurance. Maintenance is added separately at 1.5% of the home price per year.

What the results include

• Home price: the estimated affordable price.
• Loan amount: the mortgage principal after the down payment.
• Down payment: the cash amount applied to the price.
• Closing costs: estimated at 3% of the home price.
• Monthly principal and interest: the mortgage payment.
• Monthly housing cost: principal, interest, tax, HOA, and insurance.
• Total monthly cost: housing cost plus maintenance.
• Front-end and back-end DTI: the resulting ratios.
• Cost breakdown: monthly tax, HOA, insurance, and maintenance.

Assumptions and limitations

The calculator assumes a fixed-rate, fully amortizing loan and constant tax, HOA, and insurance rates. Closing costs are estimated at 3% of the home price, and maintenance at 1.5% per year. It does not include mortgage insurance, FHA upfront premiums, VA funding fees, utilities, or closing-cost credits. Property tax, HOA, and insurance are entered as annual percentages in this version.

Frequently asked questions

What is a safe DTI ratio?

Many conventional lenders use a 28/36 guideline, while FHA and VA loans allow higher back-end ratios. A lower DTI generally gives more room for other expenses and savings.

Why is the affordable price lower than the loan I qualify for?

The estimate includes property tax, insurance, HOA, and maintenance in the monthly cost. A lender's preapproval may consider only principal, interest, and a portion of those costs.

Does a larger down payment always increase the affordable price?

Yes, because a larger down payment reduces the loan amount for the same monthly payment. It also reduces the loan balance and interest cost.

Does this include PMI?

No. Mortgage insurance is not included in this version, so a down payment below 20% may have a higher real monthly cost.

Source

References:

• Consumer Financial Protection Bureau — Owning a Home
• HUD — FHA Lender Requirements

Disclaimer

This calculator is for informational and planning purposes only. It is not a loan offer or financial advice. Confirm affordability, taxes, insurance, and program rules with a lender.