Home Affordability Calculator

Example Calculation

A household earns $90,000 a year and has no other debts. It plans a 30-year loan at 7.4% with 20% down, property tax of 1.1% of the price a year and $2,400 a year of home insurance. The traditional 28% limit allows $2,100 a month for housing ($90,000 / 12 x 0.28). The most that fits is a home priced near $294,313. The loan is about $235,451, and the monthly cost is $1,630.21 for principal and interest, $269.79 for property tax and $200.00 for insurance, which adds up to $2,100.00.

Home price by income

30-year loan at 7.4%, 20% down, property tax of 1.1% a year, $2,400 a year of insurance, 28% housing limit and 36% total debt limit.

Other debts matter once they use up the 36% limit. At $90,000 of income the 28% housing limit is $2,100 and the 36% total is $2,700, so $600 of other debts still leaves $2,100 for housing. At $60,000 the room is smaller and the same $600 of debts cuts the price.

Home price by interest rate

$90,000 of income, no other debts, 20% down, 30-year loan.

How It Works

Lenders compare your housing payment and your debts with your gross income, which is your pay before taxes. The calculator uses the two limits that lenders often start from. The housing limit (28% by default) caps the whole monthly cost of owning the home: loan principal and interest, property tax, homeowners insurance, mortgage insurance and any homeowners association dues. The total debt limit (36% by default) caps that housing payment plus all your other monthly debt payments, such as car loans, student loans and credit card minimums. Rent, utilities and groceries do not count.

The calculator takes the smaller of the two room amounts. Then it searches for the highest price whose full monthly cost fits. A higher price needs a bigger loan, more property tax and more insurance, and if your down payment is under 20% it adds private mortgage insurance. All of these grow together, so the search finds one answer.

You can change both limits. Fannie Mae, for example, allows a total debt ratio up to 36% for manually underwritten loans and higher with a strong credit profile and savings, while many people choose to stay lower to keep room in the budget. A bank may approve you for more than you can comfortably pay. Treat the result as an upper limit to test against your own monthly budget, and remember closing costs, moving costs, repairs and higher utility bills.

The interest rate has a large effect, so try a few. The table under the results shows the same income at other rates, and a second table shows how other monthly debts change the price.

Formula Explained

housing room = smaller of (housing limit x monthly income, total debt limit x monthly income - other debts)

monthly cost = principal and interest + property tax + insurance + PMI + HOA, where principal and interest = loan x r / (1 - (1 + r)^-n), r is the monthly rate (APR / 12) and n is the number of monthly payments. Property tax is the tax rate x the price / 12. PMI is the PMI rate x the loan / 12 when the down payment is under 20%.

The calculator finds the price whose monthly cost equals the housing room.

Assumptions and limits

• A fixed-rate loan with equal monthly payments. The default 7.4% is the 30-year average in Freddie Mac’s Primary Mortgage Market Survey for mid-October 2026; your own rate depends on your credit, down payment and lender.
• The 28% and 36% limits are common guidelines and can be changed. Lenders set their own limits.
• Property tax is a percent of the price each year, insurance a flat yearly amount, and PMI a percent of the loan each year when the down payment is under 20%. PMI is counted for the whole loan here, although it can be removed at 20% equity.
• Closing costs, moving costs, repairs and utilities are not included.