About the House Affordability Calculator
A house affordability calculator works backwards from your income and existing debts to a realistic purchase price. It applies the debt-to-income limits lenders actually underwrite to, so the answer reflects what you are likely to be approved for rather than what you would like to spend.
The formula
Max payment = (Income/12 · 0.36) − existing monthly debtThe 36 percent figure is the conventional back-end debt-to-income ceiling: total monthly debt payments, housing included, divided by gross monthly income. The resulting payment is then converted into a loan amount, and your deposit is added on top.
How to use this calculator
- 1Enter your Annual Gross Income ($). The field starts at
80000, which you can overwrite. - 2Enter your Monthly Debt Payments ($). The field starts at
500, which you can overwrite. - 3Enter your Down Payment ($). The field starts at
60000, which you can overwrite. - 4Enter your Interest Rate (%). The field starts at
6.5, which you can overwrite. - 5Enter your Loan Term (Years). The field starts at
30, which you can overwrite. - 6Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Annual Gross Income ($) | 80000 |
| Monthly Debt Payments ($) | 500 |
| Down Payment ($) | 60000 |
| Interest Rate (%) | 6.5 |
| Loan Term (Years) | 30 |
Result
Max Home Price: $355,327
Max Loan: $295,327
Est. Monthly Payment: $1866.67
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
Lenders test two ratios. The front-end ratio caps housing costs at roughly 28 percent of gross income; the back-end ratio caps all debt payments together at around 36 percent, sometimes stretching to 43 or even 50 percent for strong applicants. Whichever binds first sets your ceiling, which is why paying off a car loan can raise your buying power more than a raise would.
Approval and affordability are different questions. These ratios use gross income and ignore tax, retirement contributions, childcare, and the maintenance costs that arrive with ownership. Many buyers who borrow to their maximum find the payment technically approved and practically uncomfortable.
Things worth knowing
- Clearing a monthly debt payment frees roughly three times its size in mortgage payment capacity under the 36 percent rule.
- Budget 1 to 2 percent of the home's value each year for maintenance and repairs — a cost renting never charged you.
- Closing costs typically run 2 to 5 percent of the price and are payable on top of your deposit.
- A pre-approval carries far more weight with sellers than any calculator, and it reflects your actual credit file.
- Buying below your maximum is not a wasted opportunity. It is what leaves room for a job change or a bad year.
Frequently asked questions
How much house can I afford on my salary?+
A common rule of thumb is 3 to 4 times gross annual income, but the honest answer depends on your deposit, existing debts, interest rates, and local property taxes. Enter your own figures above rather than relying on a multiple.
What debt-to-income ratio do lenders require?+
Conventional loans generally look for 36 percent or below, though many approve up to 43 percent. FHA loans can go to 50 percent with compensating factors such as strong reserves or a high credit score.
Does my credit score change how much I can borrow?+
Indirectly but significantly. A higher score earns a lower rate, and a lower rate buys more house for the same monthly payment. The difference between a 620 and a 760 score can be worth tens of thousands in purchasing power.
Should I borrow the maximum I am approved for?+
Rarely. Approval is based on gross income and ignores childcare, tax, retirement saving, and home maintenance. Leaving a margin is what makes ownership survivable when something unexpected happens.