Find out how much house you can afford based on your annual income, monthly debts, down payment amount, and current mortgage rates. This calculator uses standard lending criteria including the 28/36 debt-to-income rule to determine your maximum home price, maximum loan amount, and recommended monthly payment. Make sure you are shopping within your budget before you start house hunting.
Max Home Price
$415,728
Based on 43% DTI limit
Max Loan Amount
$355,728
Max Monthly Payment
$2,367
Current Debt-to-Income
7.5%
Excellent DTI
Recommendation: With $60,000 down and $80,000/year income, you can afford a home up to $415,728. Keep total housing costs under 28% of gross monthly income.
Banks use specific criteria to determine how much they will lend you. Understanding these rules before you start house hunting prevents the disappointment of falling in love with a home you cannot afford and helps you negotiate from a position of knowledge.
Most lenders follow the 28/36 rule: your monthly housing costs (mortgage, taxes, insurance) should not exceed 28% of your gross monthly income, and your total monthly debt payments (housing plus car loans, student loans, credit cards) should not exceed 36%. Some lenders allow up to 43% total DTI for qualified borrowers.
Your annual gross income sets the upper limit. Existing debts reduce your borrowing capacity. The down payment determines your loan amount. The interest rate affects your monthly payment — even a 0.5% difference significantly impacts affordability. Property taxes and insurance are required costs that reduce your borrowing power.
A 20% down payment avoids Private Mortgage Insurance (PMI), which typically costs 0.5-1% of the loan annually. However, many loan programs accept 3-5% down. FHA loans can offer lower down payment options for eligible buyers. Weigh the benefit of a larger down payment against keeping cash reserves.
Beyond the mortgage, budget for property taxes (1-2% of home value annually), homeowner's insurance, HOA fees, maintenance (1-2% annually), utilities (often higher than renting), and closing costs (2-5% of purchase price). These can add $500-$1,500+ monthly to your housing costs.
Before house hunting, get pre-approved by a lender. This tells you exactly how much you can borrow, shows sellers you are a serious buyer, and locks in your interest rate for 60-90 days. Shop multiple lenders — rates and terms can vary significantly.