Estimate the maximum home price you can afford based on your income, existing debts, down payment, estimated taxes, PMI, and current market conditions. Adjust the inputs below to see how different scenarios affect your buying power.
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Lenders use debt-to-income (DTI) ratios to determine how much you can borrow. The front-end ratio limits your total housing costs to 28% of your gross monthly income, while the back-end ratio limits all monthly debt payments (including housing) to 36% of your gross income. This calculator applies both rules and uses the more conservative result, then accounts for property taxes, insurance, and PMI to arrive at your maximum home price.
Debt-to-income ratio is the percentage of your gross monthly income that goes toward paying debts. There are two types: the front-end DTI covers housing costs only (mortgage, taxes, insurance), while the back-end DTI includes all recurring debt payments such as car loans, student loans, and credit cards. Most conventional lenders prefer a front-end DTI of 28% or less and a back-end DTI of 36% or less.
Your credit score directly impacts the interest rate you qualify for. A higher score means a lower rate, which reduces your monthly payment and allows you to afford a more expensive home. For example, the difference between a "Fair" and "Excellent" credit score can mean a full percentage point or more in rate savings, which translates to tens of thousands of dollars over the life of a 30-year mortgage.
Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home price. PMI protects the lender in case you default on the loan. It typically costs between 0.3% and 1.5% of the original loan amount per year. You can request to remove PMI once your loan balance drops to 80% of the home's original value, and lenders are required to automatically cancel it when the balance reaches 78%.
A 20% down payment is ideal because it eliminates the need for PMI and gives you immediate equity, but it is not required. FHA loans allow down payments as low as 3.5% for qualified borrowers, and many conventional loan programs accept 3% to 5% down. A larger down payment lowers your monthly payment and may help you qualify for a better interest rate.
Beyond the mortgage payment, plan for closing costs (typically 2% to 5% of the loan amount), ongoing maintenance (budget 1% to 2% of the home's value per year), utilities, and HOA fees if applicable. These expenses add up and should factor into your overall housing budget to avoid being house-poor.
Track your monthly expenses versus income to understand how much you can comfortably allocate toward housing without stretching your budget.
Property taxes, homeowners insurance, maintenance, and HOA fees can add hundreds per month beyond your mortgage payment.
A higher credit score qualifies you for a lower interest rate, which directly increases the home price you can afford.
FHA, VA, conventional, and jumbo loans each have different requirements and benefits. Compare programs to find the best fit.
Putting down 20% or more eliminates PMI and lowers your monthly payment, giving you more breathing room in your budget.
Do not max out your debt-to-income ratio. Leave room for unexpected expenses, savings goals, and lifestyle spending.
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