Find Your Dream Home Budget

Disclaimer: This is an estimate based on simplified assumptions. Consult a lender for precise loan terms and local tax/insurance rates.

Our Home Affordability Calculator helps you estimate the home price you can afford based on your income, debt, and loan terms. Enter your details to see your budget and cost breakdown.

How to Use the Home Affordability Calculator

1. Enter your annual income (e.g., $80,000) from all sources.
2. Input your monthly debt payments (e.g., $1,000) for loans and credit cards.
3. Specify your down payment (e.g., $20,000).
4. Enter the interest rate (e.g., 4%) for the mortgage.
5. Input the loan term (e.g., 30 years).
6. Click Calculate Affordability to view the affordable home price, loan amount, and monthly cost chart.

The Logic Behind It

The calculator uses a debt-to-income (DTI) ratio of 36% to determine affordability:
1. Maximum Monthly Housing Payment = (Annual Income / 12 × 0.36) - Monthly Debt Payments.
2. Monthly Mortgage Payment (principal and interest) is calculated using the loan amortization formula:
M = P × (r × (1 + r)^n) / ((1 + r)^n - 1)
Where M = Monthly Payment, P = Loan Amount, r = Monthly Interest Rate, n = Number of Payments.
3. Estimated property taxes (1% of home price annually) and insurance ($100/month) are added to the mortgage payment.
4. The affordable loan amount is derived by solving for P, and the affordable home price = Loan Amount + Down Payment.
The pie chart shows the breakdown of monthly housing costs (principal and interest, taxes, insurance).

Benefits of Using the Home Affordability Calculator

• Clarity: Know the home price range you can afford.
• Planning: Budget for mortgage payments and additional housing costs.
• Insight: Understand the impact of income, debt, and down payment.
• Visualization: See the monthly cost breakdown with a chart.