Home Affordability Calculator
Estimate a planning home price from income, debts, down payment, mortgage rate, property tax, insurance, and modeled mortgage insurance.
Earlier editorial review
- Reviewed
- 2026-09-21
- Methodology
- 1.1
Sources
How the estimate works
The calculator uses two illustrative planning limits: monthly housing cost up to 28 percent of gross monthly income, and housing cost plus entered monthly debts up to 36 percent. It uses the lower limit, floored at zero. These are budgeting assumptions, not lender approval rules or universal affordability standards.
Enter income before tax, recurring monthly debts, cash set aside for a down payment, a nominal annual mortgage rate, an annual property tax rate, annual homeowners insurance, and an annual PMI estimate. The model assumes a 30 year fixed mortgage with 360 monthly payments. Monthly principal and interest use the annual rate divided by 1200.
The monthly housing cost includes principal and interest, price based property tax, annual insurance divided by 12, and modeled PMI. PMI applies when the modeled down payment is below 20 percent of price. Because PMI changes at that threshold, the cost curve has a step. The price search accounts for that change rather than smoothing it away.
The displayed down payment is only the amount applied to the modeled price. It is not total cash to close and excludes closing costs, prepaid expenses, moving costs, reserves, and repairs. The result is a planning estimate, not a preapproval or promise of lender eligibility.
Step by step
- Enter gross monthly income, recurring monthly debts, and cash available for the down payment after reserves.
- Add the mortgage rate and estimates for local property tax, annual homeowners insurance, and annual PMI.
- Review the payment breakdown and consider a lower price that fits your full household budget.
Worked example
With gross monthly income of 8,000 USD, monthly debts of 500 USD, a 60,000 USD down payment, a 6.5 percent annual rate, 1.2 percent annual property tax, 1,200 USD annual insurance, and a 0.5 percent annual PMI estimate, the model returns a maximum planning price near 328,826 USD and a loan near 268,826 USD. The modeled down payment is about 18.25 percent of the price, so PMI applies.
The 28 percent housing limit is 2,240 USD per month. At the solved price, principal and interest are about 1,699.16 USD, property tax 328.83 USD, insurance 100 USD, and PMI 112.01 USD. Total modeled housing cost is about 2,240 USD. The housing ratio is 28 percent and housing plus debt is 34.25 percent of gross income.
When to use this calculator
Use the estimate to compare how monthly debt, down payment, mortgage rate, property tax, or insurance changes a planning price. The breakdown shows which entered cost uses the most monthly budget.
Do not treat the maximum as a spending target. Compare it with a household budget and a lender review, and keep money for closing costs and emergencies. This calculator does not test your full cash needs.
Common input mistakes
Leaving out recurring debt payments can overstate the planning price. Include required card, vehicle, student, personal loan, support, and other recurring debt payments when applicable. Use local tax information and an insurance estimate rather than counting principal and interest alone.
Do not enter all available savings as a down payment if some must cover closing costs or reserves. The calculator reports only the down payment applied to the modeled price. PMI rules and costs vary by loan and borrower, so treat the entered rate as an estimate.
Formula
Housing limit = gross monthly income × 0.28
Debt limit = gross monthly income × 0.36 less other monthly debts
Monthly housing budget = lower limit, floored at zero
Loan = home price less down payment used
Monthly rate = nominal annual rate / 1200
Principal and interest = loan × monthly rate / (1 less (1 + monthly rate)^(-360))
At a zero rate, principal and interest = loan / 360
Property tax = home price × annual tax rate / 1200
Insurance = annual insurance / 12
PMI = loan × annual PMI rate / 1200 when down payment is below 20 percent
The price search finds the highest modeled price whose monthly housing cost fits the budget.
The model uses a fixed 30 year term and the same cash down payment throughout. PMI is included below a 20 percent down payment ratio, creating a cost step at that point. Lenders may use different ratios, insurance methods, qualifying rates, income tests, loan programs, and approval rules.
Limitations and assumptions
The 28 and 36 percent limits are illustrative budgeting assumptions, not approval standards. The model assumes a fixed 30 year mortgage, level monthly payments, price based property tax, annual insurance, and an entered PMI estimate. It excludes closing costs, association dues, utilities, repairs, reserves, prepaid expenses, lender fees, loan specific insurance rules, and other qualification tests. It does not determine lender eligibility or total cash required for a purchase.
Key terms
- 28/36 planning limits
- Illustrative budgeting limits in this calculator: housing cost up to 28 percent of gross income and housing plus entered debt up to 36 percent.
- Principal and interest
- The scheduled monthly loan payment for principal and interest under the assumed 30 year fixed rate term. It excludes tax, insurance, PMI, and fees.
- Private mortgage insurance
- An estimated insurance cost modeled here when the down payment is below 20 percent. Actual requirements and pricing vary by loan and borrower.
FAQ
What does the 28/36 rule mean here?
This calculator uses 28 percent of gross monthly income as a housing budget limit and 36 percent for housing plus entered monthly debts. These are illustrative planning limits. They are not universal lender rules or a guarantee of approval.
How much home can I afford on a 60,000 USD salary?
Salary alone is not enough to determine a price. Monthly debts, down payment, rate, tax, insurance, and PMI all affect the estimate. For a 60,000 USD annual salary, enter gross monthly income of 5,000 USD and use local cost estimates. A lender may reach a different result after reviewing your finances and the property.
How does a down payment below 20 percent affect the estimate?
The model adds the entered annual PMI estimate when the down payment used is below 20 percent of the price. At 20 percent or more, modeled PMI is zero. Actual mortgage insurance requirements and costs depend on the loan and borrower.
How does property tax affect the planning price?
The model applies the entered annual property tax rate to the home price and divides it by 12. That monthly amount uses part of the housing budget, leaving less for principal and interest. Actual assessments, exemptions, and local rules can differ.
Which debts should I include?
Include recurring monthly debt obligations such as required card payments, vehicle loans, student loans, personal loans, support payments, and other installment debt. Do not include the modeled mortgage payment as another debt because it is already part of housing cost. Lenders may classify obligations differently.
Related tools
Use a closing cost estimate to plan separate upfront expenses, and compare mortgage payment scenarios with a mortgage calculator. A rent versus buy analysis can address questions that this monthly budget screen does not model.