Home Affordability Calculator
Find out how much house you can afford based on your monthly budget. Calculate maximum home price, loan amount, and total housing costs including taxes, insurance, and HOA.
How It Works
A home affordability calculator answers the most fundamental question in home buying: how much house can you actually afford? Rather than starting with a sale price and calculating the payment, this calculator works in reverse — you enter your monthly housing budget, and it solves for the maximum home price that keeps your total housing costs within that number.
Your monthly housing budget isn't just your mortgage payment. A complete monthly housing cost includes principal and interest (P&I), property taxes, homeowner's insurance, and any HOA fees. Each of these is entered separately here so the calculator can isolate the P&I budget — the amount left over after non-mortgage costs — and reverse-solve for the maximum loan and home price that fits within it.
The reverse mortgage formula works by solving for principal (P) given a known payment (M): P = M × [(1+r)^n − 1] / [r × (1+r)^n]. Once the maximum loan amount is calculated, the maximum home price is derived by dividing by (1 − down payment percentage). For example, with a 20% down payment, the loan represents 80% of the home price, so: home price = max loan / 0.80.
The 28/36 rule is a commonly cited affordability guideline: housing costs should not exceed 28% of gross monthly income, and total debt payments should not exceed 36% of gross income. This calculator doesn't apply income-based rules — it uses your stated monthly budget directly — but it's worth cross-checking your budget number against your income to ensure it aligns with lender expectations. Most conventional lenders cap housing expense ratios at 28–31% of gross income.
Down payment significantly affects affordability in two ways. A larger down payment means a smaller loan for the same home price, reducing both your monthly payment and total interest paid. It also eliminates Private Mortgage Insurance (PMI) when you put 20% or more down — PMI typically adds $50–$200/month to your payment. This calculator shows P&I only and does not include PMI; factor PMI in if your down payment is below 20%.
Property taxes and homeowner's insurance vary dramatically by location and property value. The defaults here are rough national medians — your actual costs will differ. Enter your specific estimates for the most accurate affordability calculation. Your real estate agent and local government websites are the best sources for property tax rates in any given area.
Formula Breakdown
The home affordability calculator uses the reverse mortgage formula: P = M × [(1+r)^n − 1] / [r × (1+r)^n] Where: - P = Maximum loan amount (what we're solving for) - M = Monthly P&I budget (total budget minus tax, insurance, HOA) - r = Monthly interest rate (annual rate ÷ 12 ÷ 100) - n = Total number of payments (years × 12) Step 1: Calculate monthly non-P&I costs Monthly tax = $3,000 / 12 = $250 Monthly insurance = $1,200 / 12 = $100 Monthly HOA = $200 Total non-P&I = $550 Step 2: Calculate P&I budget P&I budget = $2,000 − $550 = $1,450 Step 3: Reverse-solve for max loan (at 6.5%, 30 years) Max loan ≈ $1,450 × [(1.005417)^360 − 1] / [0.005417 × (1.005417)^360] Max loan ≈ $229,200 Step 4: Calculate max home price (20% down) Max home price = $229,200 / 0.80 ≈ $286,500 Special case — 0% interest rate: Max loan = P&I budget × n (simple division)
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