Affordability Calculator
Learn how much house you can afford with our easy-to-use calculator.
Monthly Payment: $2,250
Debt-to-income ratio: 36%
*Debt-to-income ratio (DTI) shows how much you can comfortably borrow. The debt-to-income ratio is your monthly debt divided by your gross monthly income. The lower the DTI, the more you can borrow and the more options you have.
0-36% Affordable: Lenders typically prefer a DTI of 36% or less. With a DTI in this range, you may qualify for better interest rates and loan terms.
37% or higher Aggressive: A DTI above 36% may make it harder to qualify for a mortgage. You may need to lower your DTI by paying off debt or increasing your income.
To know how much house you can afford, an affordability calculator can help. But remember that when it comes to affordability, the amount a lender will lend you and the amount you can comfortably pay without stretching your budget too thin could be very different. One influential factor in determining the amount of money you can borrow is a home loan is the debt-to-income ratio. A good DTI greatly impacts your ability to pre-qualify for a mortgage. Ultimately you have the final say in what you’re comfortable spending on a home. A lender’s assessment is important, but in the end, you need to take a look at your income, expenses, and savings priorities to understand what fits comfortably within your budget.
While every person’s situation is different (and some loans may have different guidelines), here are the generally recommended guidelines based on your gross monthly income (before taxes):
How much you can afford to spend on a home depends on several factors, including the primary factors: your and your co-borrower’s annual income, down payment, and location (which is a primary factor in determining your interest rate and property tax).
This one’s a no-brainer. The more income you include as co-borrower’s income you’re buying the home together.
Your debt directly affects your affordability since it’s based on your debt-to-income ratio (DTI) between what you earn and what you owe (debts).
Believe it or not, the interest rate you can make a big difference in how much home you can afford. Rates based on location, which can affect your affordability.
Your credit score plays a big role in the interest rate you qualify for. The higher your score, the better the rate you’ll get.
Your down payment plays a big part in your affordability. The more you put down, the lower your monthly payment will be.
Homeownership comes with costs that rentals do not. So remember to put extra money away for repairs and maintenance.