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Mortgage Affordability Calculator
How much home can you afford? The answer depends on your income and on the debts you already pay each month. This calculator turns those two things into a highest monthly payment and a loan size.
The starting figures are an income of $90,000 a year, $900 of other monthly debts and a $40,000 down payment.
How the limit is worked out
Lenders often use two rules of thumb. Housing should take about 28 percent of gross monthly income. All debt payments together should take about 36 percent. The calculator uses whichever limit is lower. Your income of $90,000 a year is $7,500 a month.
Worked example
With $90,000 of income the monthly figure is $7,500. Twenty-eight percent of that is $2,100.00. Thirty-six percent less $900 of debts is $1,800.00. The lower figure of $1,800.00 becomes the highest payment.
At 6.4 percent over 30 years that payment supports a loan of $287,767. Add the $40,000 down payment and the price comes to $327,767.
Questions about this calculator
Why do $900 of monthly debts matter so much?
Without those debts the highest payment would be $2,100.00 and the loan $335,728. With them the debt rule takes over and the loan falls to $287,767. Paying down a debt can raise the amount a lender will approve.
Does this payment include property tax and insurance?
No. The calculator treats the whole payment as principal and interest. Real housing costs include tax and insurance, so the loan you can safely carry is lower than the figure shown.
What if income rose to $110,000 a year?
With the same debts and rate the loan could reach $383,689. That is $95,922 more than on $90,000.
Are the 28 and 36 percent rules fixed?
No. They are common rules of thumb. Lenders set their own limits and look at credit history and savings too. Treat the result as a starting point for a conversation with a lender.
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This page is for education only and is not financial or tax advice.