Affordability
How Much House Can I Afford?
Estimate the home price your income supports from your income, monthly debts, down payment and rate, using the debt-to-income limits lenders actually apply.
- Loan amount
- $415,000
- Total monthly housing payment
- $3,342Principal, interest, taxes and insurance.
- Principal and interest
- $2,692
- Loan-to-value
- 87.4%Above 80%: expect mortgage insurance on a conventional loan.
How the math works
- 1
Start from gross monthly income
Divide annual household income by twelve.
- 2
Apply the debt-to-income limit
Multiply by the maximum ratio, then subtract existing monthly debt payments. What is left is the housing budget.
- 3
Take out taxes and insurance
Subtract the monthly property tax and insurance estimate. The remainder is available for principal and interest.
- 4
Turn the payment into a loan
A 30-year fixed payment at the rate you entered supports a specific loan amount. Add the down payment to get the home price.
Worked example with the starting figures above: home price you can afford $475,000; loan amount $415,000; total monthly housing payment $3,342; principal and interest $2,692; loan-to-value 87.4%. Rates are illustrative examples, not a quote.