Home Affordability Calculator - Calculate Your Home Buying Power Based on DTI
Home Affordability Calculator
Home Affordability Results:
Monthly Payment Breakdown and Total Cost Analysis
| Item | Monthly | Total |
|---|---|---|
| Mortgage Payment | ||
| Property Tax | ||
| Home Insurance | ||
| PMI | ||
| HOA Fee | ||
| Estimated maintenance cost (1.5%) | ||
| Total Housing Cost |
Total Cost of Homeownership Distribution
How Do I Calculate How Much I Qualify for a Home Loan?
Rough calculation steps:
- Calculate your maximum allowable monthly debt payment using your income and DTI (e.g., 36% × monthly income).
- Subtract your existing monthly debts (car loans, credit cards, etc.) from that number to find your maximum mortgage payment.
- Use a mortgage calculator with that payment, interest rate, and loan term to estimate loan amount.
For example, if your gross monthly income is $6,000 and your lender allows 36% DTI:
$6,000 × 0.36 = $2,160 maximum total debt payments
If your current debts total $500/month, your maximum mortgage payment is $2,160 - $500 = $1,660.
Using a mortgage calculator with $1,660/month, 4% interest, and 30-year term, you might qualify for about $347,000.
For precise qualification, consult with lenders or use the calculator on this page.
With an Annual Income of $80,000, How Much Can I Afford in a House?
If you're looking at a 30-year term with 20% down, a fixed rate of 6%, property tax at 1.5% per year, and home insurance at 0.5% per year, then based on the 28/36 rule, you can afford a house worth about $288,885.
Frequently Asked Questions
What Is the 28/36 Rule?
The 28/36 rule is a conservative guideline used by conventional lenders. It suggests that no more than 28% of your gross monthly income should go toward housing costs, and no more than 36% should go toward total debt payments including housing.
How Much Should I Put Down on a House?
While 20% down eliminates PMI requirements, many loan programs accept lower down payments. FHA loans require as little as 3.5% down, VA loans often require no down payment, and some conventional loans accept 3% down for qualified buyers.
What Is Pmi and When Is It Required?
Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is less than 20%. PMI typically costs 0.3% to 1.5% of the loan amount annually and can be removed once you reach 20% equity in your home.
Should I Include Maintenance Costs in My Budget?
Yes, homeownership includes ongoing maintenance and repairs. A common estimate is 1-3% of the home's value annually. Our calculator includes a 1.5% maintenance cost estimate to provide a more realistic picture of total housing expenses.
Sources and References
This calculator's methodologies and guidelines are based on information from authoritative sources:
Government Resources:
- Federal Housing Administration (FHA): HUD.gov - FHA Loan Programs
- Department of Veterans Affairs: VA.gov - Home Loan Programs
- Consumer Financial Protection Bureau: ConsumerFinance.gov - Owning a Home
- Federal Trade Commission: Consumer.FTC.gov - Homes and Mortgages
- Federal Reserve: FederalReserve.gov - Household Debt Research
- U.S. Census Bureau: Census.gov - Housing Statistics
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