How to use the House Affordability Calculator
- Enter gross annual household income before tax — lenders underwrite on gross, not take-home.
- Add the monthly minimums on car loans, student loans and credit cards.
- Enter your available down payment and a realistic current mortgage rate.
- Adjust the tax and insurance percentage to your county, then read the affordable price.
How the calculation works
The model applies a 36% back-end debt-to-income ceiling: total monthly debt including the new housing payment must stay under 36% of gross monthly income. Existing debts are subtracted first, leaving the housing budget, which is then split between principal, interest, property tax and insurance.
Property tax and insurance scale with price rather than with the loan, so they are modelled as an annual percentage of the purchase price. In a high-tax county this single input can move the affordable price by tens of thousands of dollars, which is why two buyers with identical incomes can afford very different homes.
Qualifying for a price and being comfortable at it are different questions. Many households find 28% of gross income on housing far more livable than 36%, particularly with childcare or variable income. Run it at both and treat the lower number as your search budget.
Price = (0.36 × gross monthly income − debts) ÷ (mortgage factor + tax & insurance rate ÷ 12) + down paymentSource: Fannie Mae Selling Guide B3-6-02 debt-to-income ratio limits; FHFA conforming loan underwriting standards.
Worked example
$95,000 income, $500 monthly debts, $60,000 down, 6.5% rate, 1.6% tax and insurance.
- Gross monthly income is $7,917; 36% of that is $2,850.
- After $500 of existing debts, $2,350 is available for housing.
- At 6.5% over 30 years plus 1.6% carrying cost, that supports about $312,000 of price.
Roughly $372,000 total including the down payment, with a loan near $312,000.
Frequently asked questions
Why is the answer lower than my pre-approval?+
Pre-approvals often stretch to 43% or higher DTI and may exclude taxes at your target price. This uses a more conservative 36%.
Does a bigger down payment raise the price I can buy?+
Yes, dollar for dollar, and it also removes mortgage insurance at 20%, which frees more of the payment for principal.
Are student loans in deferment counted?+
Usually yes — most underwriters impute roughly 0.5–1% of the balance as a monthly payment even while deferred.
Last reviewed September 1, 2026. We review this page whenever the underlying formula, tax year, published rate or standard changes.