How to use this calculator
- Enter your Gross monthly income (before tax) and Other monthly debt payments such as car, student and card minimums.
- Enter your Cash for down payment, the Interest rate and Loan term.
- Set the Max debt-to-income ratio you want to use; 36% is a common planning figure.
- Estimate Monthly tax, insurance & fees, then read the Home price you can afford and the maximum loan.
How the affordable price is found
Lenders limit how much of your gross income may go to debt payments, called the debt-to-income (DTI) ratio. The calculator multiplies your income by that limit, subtracts your other debts, and what remains is the most you can spend on housing each month.
Housing budget = Income × DTI − Other debts; P&I = Budget − Tax/ins/fees; Loan = P&I · (1 − (1 + r)^−n) / r; Price = Loan + Down payment- DTI = the maximum share of gross income for all debt payments
- r = monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = number of monthly payments (years × 12)
- P&I = monthly principal and interest payment
From that it subtracts taxes, insurance and fees. The rest is the principal and interest payment, and the loan size that payment supports is the present value of the payments. Adding your down payment gives the price.
Example: $8,000 a month and $60,000 saved
With the defaults (income $8,000, other debts $500, $60,000 down, 6.5% over 30 years, 36% DTI, $450 of tax and insurance) the total housing budget is $2,380. After $450 of taxes and insurance, $1,930 is left for principal and interest. That supports a loan of $305,347 and a price of about $365,000, with a down payment of 16.4%.
The result is a ceiling, not a target. Many buyers choose a lower price to keep room for saving, travel and repairs.
What moves the answer
Existing debt hurts a lot. Raise other debts from $500 to $1,200 a month and the affordable price drops from about $365,000 to $254,599, because every dollar of debt payment comes straight out of the housing budget. Paying off a car loan can increase your buying power more than a bigger raise would.
A more cautious DTI of 28% cuts the price to $264,092. And a lower rate of 5.5% instead of 6.5% lifts it to $399,915, with the same payment. Use the debt-to-income calculator to measure your current ratio.
From a price to a real budget
Once you have a target price, enter it into the mortgage calculator to see the full payment, total interest and yearly schedule. Check that the payment fits your take-home pay after savings goals, not only the lender's ratio.
Keep cash beyond the down payment for closing costs, moving and the first repairs. A smaller down payment may be right if it keeps your emergency fund intact, but then the monthly cost and any mortgage insurance rise.
Ways to afford more, safely
- Pay down or remove monthly debts before applying.
- Compare rates from several lenders; the rate changes the price you can reach.
- Choose areas with lower property tax and insurance costs.
- Add savings to the down payment, which also lowers the loan.
- Add a co-borrower's income only if you both understand you are both liable for the debt.
Assumptions and limits
The estimate uses one DTI limit, a fixed rate and the tax and insurance figure you enter. Actual approval also depends on credit score, employment history, loan program, reserves, mortgage insurance and the lender's own rules. The tool does not predict approval or a rate.
Ask a lender for a pre-approval to learn what you actually qualify for, and treat this page as a planning guide.
Frequently asked questions
How much house can I afford on an $8,000 monthly income?
With $500 of other debts, a 36% DTI limit, 6.5% interest, 30 years and $60,000 down, about $365,000. Your own debts, rate and costs will change it.
What debt-to-income ratio should I use?
Lenders commonly use limits in the mid-30s to low-40s percent, depending on the loan program. A lower figure leaves more room in your budget.
Should I spend the maximum the calculator shows?
Not necessarily. The maximum is what a lender may allow, not what is comfortable once you add savings, maintenance and other goals.
Does gross or net income matter?
DTI uses gross income, before tax. Compare the resulting payment with your take-home pay too.
Do I need 20% down?
No. A smaller down payment is possible with many loans, but the monthly payment is higher and mortgage insurance may apply.