🏡 How Much House Can I Afford?

The 28% rule is a guideline used by many lenders. It suggests your total housing payment, including principal, interest, property taxes, and homeowners insurance, should not exceed 28% of your gross monthly income. If you earn $5,000 per month before taxes, your maximum PITI payment under this rule is $1,400. Some lenders stretch this to 31% or higher depending on your full financial picture, but 28% is the standard conservative benchmark used throughout this calculator.

Your debt-to-income ratio (DTI) is the percentage of your gross monthly income that goes toward all debt payments, including the mortgage, car loans, student loans, minimum credit card payments, and any other recurring debt. Most conventional lenders want your total DTI below 43%. FHA loans allow up to 50% in some cases. A high DTI is one of the most common reasons mortgage applications are denied. Paying down existing debt before applying can significantly improve your approval odds and interest rate.

For a conventional loan, most lenders want a credit score of at least 620, though you will get better rates with 740 or above. For an FHA loan, you can qualify with a score as low as 580 for 3.5% down, or as low as 500 with 10% down. VA loans and USDA loans do not have official minimum scores but most lenders require at least 620. Your credit score directly affects your interest rate and total loan cost over time.

Closing costs are fees associated with processing your mortgage and transferring ownership of the property. They typically range from 2% to 5% of the loan amount and include loan origination fees, title search and title insurance, attorney or settlement fees, recording fees, prepaid interest, homeowners insurance premium, and initial escrow deposits for taxes. Your lender is required to provide a Loan Estimate within three business days of application that itemizes every fee.

Private mortgage insurance (PMI) is a monthly fee lenders charge when your down payment is less than 20%. It protects the lender against default. PMI typically costs 0.5% to 1.5% of the loan amount annually. You can avoid PMI by putting 20% down. Once you reach 20% equity through payments and appreciation, you can request removal. On FHA loans, the equivalent is called MIP and is structured differently, often lasting the life of the loan.

Earnest money is a deposit you make when your offer is accepted to show the seller you are serious. It typically ranges from 1% to 3% of the purchase price and is held in escrow. If the sale goes through, it is applied toward your down payment or closing costs. If you back out for a reason covered by a contingency in your contract, you generally get it back. If you back out without a valid contingency reason, the seller can keep it.

A 15-year mortgage has a higher monthly payment but a lower interest rate and you pay off the home in half the time, saving significantly in total interest. A 30-year mortgage has a lower monthly payment and more cash flow flexibility. The right choice depends on your income stability, other financial goals, and whether the higher payment is truly comfortable for your budget long-term.

Yes. Single homebuyers are one of the fastest growing segments in the housing market. The keys are the same as for any buyer: manage your DTI, keep your credit strong, save for the down payment and closing costs, and explore first-time buyer programs. Being a single buyer means only one income qualifies, which affects how much you can borrow, but 100% of the equity is yours. Many single buyers start with a starter home, build equity, and use that to upgrade later.

No. This calculator estimates affordability based on the 28% front-end ratio using your housing payment only. It does not factor in PMI, HOA fees, flood insurance, car loans, student loans, credit card minimums, or other monthly debt obligations. Your lender will look at all of these when reviewing your full application. Use this as a starting point, then speak with a licensed mortgage professional for a complete picture.

No. This calculator provides an educational estimate based on information you enter. It is not a mortgage offer, preapproval, or guarantee of financing. Actual loan eligibility and costs depend on the lender, credit history, debt-to-income ratio, employment, income documentation, property, loan program, mortgage insurance, closing costs, and other requirements. Always work with a licensed mortgage professional before making any purchasing decisions.

Using the 28% guideline as a general rule, here are rough gross income estimates at a 6.75% interest rate, 30-year term, 10% down, 1.2% property tax, and $1,400 annual insurance. For a $300,000 home you would generally need approximately $70,000 to $80,000 in annual gross income. For a $400,000 home roughly $95,000 to $110,000. For a $500,000 home approximately $120,000 to $140,000. These are estimates only and do not include HOA fees, PMI, or your existing monthly debts, all of which can significantly change your actual purchasing power. Use the calculator above with your exact numbers for a personalized result. Interest rates also move frequently so results will vary based on how much house you can afford with current interest rates at the time you apply.

A conservative home budget keeps your total housing payment well below 28% of gross income, ideally around 20% to 25%, leaving more room for savings, debt payoff, emergency funds, and lifestyle expenses. A stretch budget pushes closer to 28% or slightly above, maximizing the home price you can qualify for. Most financial advisors suggest starting with a conservative vs. stretch home budget comparison before committing to the top of your approval range. Just because a lender approves you for a higher amount does not mean that amount will be comfortable in your day-to-day budget. Use this calculator to see both scenarios by running it twice with different income or down payment inputs.