House Affordability Calculator: How Much Home Can You Really Afford Based on Your Income

One of the biggest questions in home buying is not “which house do I want?” but “how much house can I actually afford?” Lenders use standard ratios to determine your borrowing limit, but those numbers may not match your actual monthly budget. Knowing your true affordability range helps you shop confidently and avoid the stress of being “house poor.”

Use our House Affordability Calculator to find your price range based on income, debts, and down payment.

The 28/36 Rule

Most lenders follow the 28/36 rule to determine how much you can borrow:

• 28% — Your monthly housing costs (mortgage principal + interest + taxes + insurance, or PITI) should not exceed 28% of your gross monthly income
• 36% — Your total monthly debt payments (housing + car loans + student loans + credit card minimums) should not exceed 36% of your gross monthly income

Real-World Example

Let us say your household earns $8,000 per month gross ($96,000/year):

• Max housing cost (28%): $8,000 × 0.28 = $2,240/month
• Max total debt (36%): $8,000 × 0.36 = $2,880/month
• If you have $500/month in existing debts (car + student loans), you have $2,880 – $500 = $2,380 available for housing

Your housing budget is limited by whichever is lower: $2,240 (28% rule) or $2,380 (36% rule minus debts). In this case, $2,240/month is your cap.

How Down Payment Affects Affordability

Down Payment	Max Home Price (6.5% rate)	Monthly Payment	PMI Required?
3%	$280,000	$2,240	Yes (adds ~$100/mo)
5%	$290,000	$2,240	Yes
10%	$310,000	$2,240	Yes
20%	$350,000	$2,240	No

Notice that a larger down payment lets you afford a more expensive home at the same monthly payment. The 20% down scenario removes PMI (“Private Mortgage Insurance”), saving $100–$200/month.

Additional Costs Homebuyers Often Forget

• Property taxes — Varies by location, typically 0.5–2.5% of home value annually
• Homeowners insurance — $800–$1,500/year on average
• PMI — Required when down payment is under 20%
• HOA fees — $100–$500/month for condos or planned communities
• Maintenance — Budget 1–2% of home value per year for repairs
• Utilities — Often higher for larger homes
• Closing costs — 2–5% of the purchase price upfront

Quick Affordability Rule of Thumb

As a rough estimate, most homebuyers can afford a home worth 2.5 to 3.5 times their annual household income. At $96,000/year, that means a home in the $240,000–$336,000 range — before accounting for down payment and interest rates.

Get a personalized affordability estimate with our House Affordability Calculator. Enter your income, debts, and down payment to see your exact price range.