You can estimate how expensive a house you can afford with a few simple rules, or you can plug your numbers into an online affordability calculator for a more tailored answer.
Quick rule-of-thumb
Most lenders use debt‑to‑income (DTI) guidelines:
- Aim for housing costs (mortgage, property tax, insurance, HOA) at or below about 28–36% of your gross monthly income.
- Aim for total debt (housing + car, student loans, credit cards, etc.) at or below about 36–43% of gross income.
A rough shortcut: many people can afford a home priced at about 3–5 times their gross annual income, assuming a normal down payment, good credit, and moderate other debts.
Key inputs you need
To get a useful estimate, gather:
- Gross annual or monthly income (you plus any co‑borrower).
- Monthly debt payments (car, cards, loans, child support, etc.).
- Down payment amount you can put toward the home.
- Target interest rate and loan term (for example, 30‑year fixed).
- Estimated property tax, homeowners insurance, and HOA fees, if any.
With these, you can either compute a payment that fits your DTI limits, or just use a calculator that does the math automatically.
Handy online calculators
Here are some reputable free calculators you can use:
Site| Tool name| What it does briefly
---|---|---
Zillow| Affordability Calculator 1| Estimates max home price from income,
debts, and down payment.
NerdWallet| House Affordability Calculator 3| Uses 28/36‑style DTI to show a
suggested budget and example scenarios.
Calculator.net| House Affordability Calculator 8| Lets you choose custom DTI
limits or a fixed monthly budget.
How to use one (step‑by‑step)
- Open any of the calculators above.
- Enter your gross annual income (or monthly, if it asks), plus your regular monthly debt payments.
- Enter how much cash you have for a down payment and pick a loan term and interest rate close to what lenders quote you.
- Adjust property tax, insurance, and HOA estimates if the calculator allows, then view the “maximum” and “comfortable” home price ranges it suggests.
If you share your numbers
If you tell your income, monthly debts, down payment, and an approximate interest rate, a simple text version of the same math can be walked through to give you a ballpark “you can probably afford around $X–$Y” range.
