Home
Back
Home Affordability Formula:
| From: | To: |
The Home Affordability Calculator estimates how much house you can afford based on your income, debts, and other financial factors. It follows the standard guidelines used by lenders to determine mortgage eligibility.
The calculator uses the standard affordability formula:
Where:
Explanation: The calculator first determines your maximum monthly mortgage payment, then calculates the loan amount you could qualify for, and finally estimates the maximum home price including a standard 20% down payment.
Details: Knowing how much house you can afford helps you shop within your budget, get pre-approved for a mortgage, and avoid financial stress. Lenders typically use a 28%/36% rule (housing debt/total debt).
Tips: Enter your annual income before taxes, existing monthly debt payments, and estimates for property taxes and insurance. Use realistic numbers for accurate results.
Q1: What is a good debt-to-income ratio?
A: Most lenders prefer 36% or lower for conventional loans, though some may go up to 43% for qualified buyers.
Q2: Does this include the down payment?
A: The calculator assumes a standard 20% down payment. For other down payment amounts, the results would need adjustment.
Q3: What's not included in this calculation?
A: Private mortgage insurance (PMI), HOA fees, maintenance costs, and utilities are not included but should be considered.
Q4: How accurate is this estimate?
A: This provides a general guideline. Actual approval amounts depend on credit score, assets, and specific lender requirements.
Q5: Should I spend the maximum amount calculated?
A: Not necessarily. It's often wise to spend less than the maximum to maintain financial flexibility.