How Much House Can I Afford? Calculator
Quick Answer: With a $100,000 annual income ($8,333/month) and minimal debt, you can afford a home priced at $350,000-450,000 depending on your down payment and interest rate. Using the 28/36 rule, your maximum monthly housing payment (PITI) should be $2,333 (28% of gross income) and total monthly debts shouldn't exceed $3,000 (36%). With 20% down and 6.8% interest, a $400,000 home costs $2,764/month—within comfortable range.
Determining how much house you can afford is one of the most critical steps in the homebuying process—buy too much and you'll become house poor, struggling to cover daily expenses; buy too little and you may regret not maximizing your purchasing power when rates were favorable. Lenders use the 28/36 rule and debt-to-income (DTI) ratio to determine your borrowing capacity, but these guidelines don't account for your lifestyle goals, savings priorities, or regional cost variations. This comprehensive affordability calculator helps you find your sweet spot by analyzing your income, existing debts, down payment savings, and desired lifestyle cushion. We'll show you not just what lenders will approve, but what you can truly afford while maintaining financial flexibility for emergencies, retirement savings, and quality of life. Input your financial details to receive personalized recommendations for maximum, comfortable, and conservative home price ranges.
What You Can Afford
Your Home Price Ranges
Understanding the 28/36 Rule
The 28/36 rule is the gold standard for mortgage affordability used by most lenders. It consists of two ratios:
28% Rule - Housing Expense Ratio
Your monthly housing expenses (PITI: Principal, Interest, Taxes, Insurance) should not exceed 28% of your gross monthly income. For example, with $100,000 annual income ($8,333/month), your maximum housing payment is $2,333/month.
- $60,000 income → $1,400/month max housing
- $100,000 income → $2,333/month max housing
- $150,000 income → $3,500/month max housing
- $200,000 income → $4,667/month max housing
36% Rule - Total Debt-to-Income Ratio (DTI)
Your total monthly debt payments (housing + car loans + credit cards + student loans + personal loans) should not exceed 36% of gross monthly income. Using the same $100,000 income example, your maximum total debt is $3,000/month.
Key Insight: If you have $500/month in existing debts, your available housing budget drops from $2,333 to $2,500 (36% total - $500 existing = $2,500 for housing). The more debt you have, the less house you can afford.
💡 Pro Tip: Pay off or reduce existing debts before applying for a mortgage. Every $100/month in debt payments reduces your home buying power by approximately $20,000-25,000.
Three Affordability Levels Explained
Maximum (Lender Approval)
The highest price lenders will approve based on 28/36 rule. This uses your full borrowing capacity and may leave little room for savings, vacations, or unexpected expenses. Many buyers who max out end up "house poor."
Best for: Buyers confident in stable income growth, minimal lifestyle expenses, and disciplined budgets.
Comfortable (Recommended)
Uses 25% of gross income instead of 28%, providing a cushion for retirement savings, emergency fund, and quality of life. This level allows for financial flexibility while still building equity.
Best for: Most buyers seeking balance between homeownership goals and financial security.
Conservative (Safe)
Uses 20-22% of gross income, providing maximum financial flexibility. Ensures ample room for savings, investments, lifestyle expenses, and economic downturns. Fastest path to paying off mortgage early.
Best for: Variable income, single-income households, aggressive savers, or those prioritizing early retirement.
Real-World Example: Three Income Scenarios
Scenario 1: $75,000 Income, $400/month Debt
- Monthly Gross: $6,250
- 28% Housing Budget: $1,750/month
- 36% Total Debt: $2,250/month
- Available Housing: $2,250 - $400 = $1,850/month
- Maximum Home: ~$260,000 (20% down, 6.8%)
- Comfortable: ~$210,000
- Conservative: ~$180,000
Scenario 2: $120,000 Income, $600/month Debt
- Monthly Gross: $10,000
- 28% Housing Budget: $2,800/month
- 36% Total Debt: $3,600/month
- Available Housing: $3,600 - $600 = $3,000/month
- Maximum Home: ~$480,000 (20% down, 6.8%)
- Comfortable: ~$400,000
- Conservative: ~$350,000
Scenario 3: $200,000 Income, $1,000/month Debt
- Monthly Gross: $16,667
- 28% Housing Budget: $4,667/month
- 36% Total Debt: $6,000/month
- Available Housing: $6,000 - $1,000 = $5,000/month
- Maximum Home: ~$820,000 (20% down, 6.8%)
- Comfortable: ~$680,000
- Conservative: ~$580,000
Frequently Asked Questions
What income do I need to buy a $300,000 house?
To comfortably afford a $300,000 house with 20% down ($60,000) at 6.8% interest, you need approximately $80,000-$90,000 annual income. Monthly PITI is around $2,050, which is 28% of $7,300/month ($87,600/year). If you have existing debts, you'll need higher income—each $100/month in debt requires an additional $3,300 annual income to maintain the 36% DTI ratio. With 10% down instead of 20%, you'll need $85,000-$95,000 due to higher loan amount and PMI costs.
How does my credit score affect affordability?
Credit score significantly impacts affordability through interest rates. Excellent credit (760+) gets ~6.3% rates, while fair credit (620-679) gets ~7.5-8% rates. On a $320,000 loan, that's a difference of $200-250/month ($2,400-$3,000 annually). Over 30 years, poor credit costs $72,000-$90,000 extra in interest. Additionally, low credit scores may require higher down payments and result in loan denials. Improve your score 6+ months before applying by paying down credit cards to under 30% utilization, disputing errors, and making all payments on time.
Should I include my spouse's income if they're self-employed?
Yes, but with documentation requirements. Lenders typically require 2 years of tax returns for self-employed income, and they'll average the two years (or use the lower year if income is declining). If self-employment income is variable, lenders may discount it by 10-25%. For example, $80,000 self-employed income might be calculated as $60,000-$72,000 for qualification. Strategies to maximize: 1) Wait until you have 2 strong tax years, 2) Minimize business deductions that reduce shown income, 3) Maintain excellent credit to offset lower income verification.
What debts are included in the 36% DTI calculation?
Lenders include all recurring monthly obligations: car loans, student loans, credit card minimum payments, personal loans, child support/alimony, and other mortgage payments (if you own rentals). They do NOT include utilities, groceries, insurance (except mortgage insurance), or entertainment. Strategy: Pay off small debts before applying—eliminating a $150/month car loan increases buying power by $30,000-$35,000. Also, lenders ignore debts with fewer than 10 months remaining, so paying down near-term debts can help qualification.
How much should I actually spend on a house?
While lenders approve up to 28% of income, financial experts recommend 25% or less for comfortable living. This ensures you can: 1) Save 15-20% for retirement, 2) Maintain 3-6 month emergency fund, 3) Pay for home maintenance (1-2% of value), 4) Enjoy lifestyle expenses (vacations, hobbies), and 5) Weather income disruptions. If you're in a high-cost area, have stable income, and minimal lifestyle expenses, 28% is acceptable. But if income is variable, you have kids, or value financial flexibility, stick to 20-25%. Use our rent vs buy calculator to model different scenarios.
What if I get denied for the house I want?
Options if denied: 1) Pay down existing debts to improve DTI (most effective), 2) Increase down payment to reduce loan amount, 3) Add a co-borrower with income and good credit, 4) Wait 6-12 months to improve credit score and save more, 5) Consider a smaller, less expensive home, 6) Look into first-time buyer programs with more lenient requirements, or 7) If marginally declined, try a different lender—underwriting standards vary. Remember: lender pre-approval isn't final—they re-verify everything at closing, so don't take on new debt or change jobs after pre-approval.
Calculate Your Complete Mortgage Cost
Now that you know your price range, calculate the exact monthly payment including taxes, insurance, PMI, and HOA fees. Our comprehensive mortgage calculator shows your complete PITI payment.
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