US Home Buying

How much house
can you afford?

Bring your income, everyday budget and savings into one home-buying scenario. Change the numbers in the text to see what limits the purchase.

Gross-income ratiosTake-home budgetDown payment + costsEditable assumptions

A salary alone does not give you a home price

A home can fit a lender’s income ratio while leaving too little for everyday life. It can also have a manageable monthly payment but require more upfront cash than you can safely commit. A useful price estimate therefore needs three separate checks: the payment against gross income, the ownership cost against take-home income, and the down payment plus purchase costs against available funds.

This article models an owner-occupied US home financed with a conventional, fixed-rate, fully amortizing first mortgage. It estimates the initial monthly costs and a purchase-price ceiling. It does not decide whether a lender will approve you. Credit, documented income, appraisal, loan limits, property condition and program eligibility remain separate questions.

Know which payment you are comparing

Principal and interest repay the loan. PITI adds property tax and homeowners insurance; this page also includes borrower-paid monthly PMI when the entered down payment is below the model’s threshold. HOA dues are added separately to the housing payment used in the ratios. An allowance for repairs and maintenance belongs to the household budget rather than the mortgage payment.

Use a property-specific tax estimate and an insurance quote that includes any additional cover you need. Here, property tax and maintenance are percentages of price, while insurance and HOA stay fixed when the search varies price. Those are planning conventions. For a different home, update the costs before trusting the estimate.

Choose ratios rather than treating them as approval promises

The front-end ratio compares housing with monthly gross income. The back-end ratio includes housing and your other entered debt payments. This model checks both chosen limits at the entered mortgage rate. Its defaults are conservative planning choices, not universal lender rules.

Fannie Mae’s published total-DTI criteria vary by underwriting route: manual underwriting generally starts at 36%, may reach 45% with qualifying factors, and Desktop Underwriter permits up to 50%. A higher allowed ratio does not establish what your household can comfortably spend. This article does not replicate that underwriting process.

Keep gross income, take-home income and cash independent

Enter annual gross income that you expect the lender to recognize, and enter the monthly income you actually receive separately. The page does not estimate income tax or change one income field when you edit the other. Regular spending includes utilities, transport, childcare and the saving you want to continue after buying. Remove rent that will end, and leave debts in their separate field.

Available purchase cash is savings minus the reserve you retain. Keep savings and reserve as your own entries. If the reserve exceeds savings, the cash check fails without reducing your reserve automatically. Count only funds you can access for the transaction; retirement balances, unapproved assistance and a possible future gift are not automatically closing money.

Build your purchase in the text

The underlined numbers are an editable starting example. Every accepted change updates the explanations, sheets and price estimate. The ranges below keep this planning scenario usable; they do not describe every loan available in the market.

Your household earns gross a year and receives take-home each month. You allow monthly for everyday spending and regular saving, and for other debts. You have saved and keep outside the purchase. The home costs and you plan a down payment. The mortgage runs for at , with a comparison uplift of . Annual property tax is estimated at of price, property insurance at a year and HOA dues at a month. Below a twenty-percent down payment, estimated annual PMI is of the initial loan. Maintenance is of price per year. You allow of price for closing costs plus for other purchase expenses. Housing is limited to of gross income, and housing plus other debts to .

annual gross income is $0–$2,000,000; monthly take-home income is $0–$100,000; monthly spending and debts are each $0–$50,000; savings are $0–$10,000,000; the reserve is $0–$10,000,000 and cannot exceed savings; the price is $10,000–$10,000,000; the down payment is 0–100%; the term is 1–40 whole years; the entered rate is 0–15%; the comparison adds 0–10 percentage points; annual property tax is 0–5% of price; annual insurance is $0–$100,000; monthly HOA is $0–$10,000; annual PMI is 0–5% of the initial loan; annual maintenance is 0–5% of price; closing costs are 0–15% of price; other purchase expenses are $0–$1,000,000; the housing ratio is 1–50%; the total-debt ratio is 1–60%. $90,000.00 available after the reserve. The purchase does not meet all model checks.

Build the monthly housing payment

The mortgage uses equal monthly principal-and-interest payments over the entered term. Taxes, insurance, PMI and HOA are added afterward. The comparison rate changes principal and interest only; it leaves the other assumptions fixed.

The 20% down payment contributes $70,000.00 and leaves a $280,000.00 loan. At 6.5% over 30 years, principal and interest are $1,769.79 a month. At 8.5% they would be $2,152.96. The comparison uses the initial loan; it is not a predicted reset of a fixed-rate mortgage.

Build the monthly housing payment
Loan amount$280,000.00
Principal + interest$1,769.79
Property tax per month$350.00
Property insurance per month$150.00
Estimated PMI per month$0.00
PITI including estimated PMI$2,269.79
HOA per month$0.00
Housing payment for the ratios$2,269.79
Housing at the comparison rate$2,652.96

PMI is estimated as the initial loan multiplied by your annual PMI assumption, divided by twelve. It is set to zero at a down payment of twenty percent or more. This is a conventional monthly-PMI scenario: an actual lender may quote a different price or insurance arrangement. The page does not predict cancellation, appreciation or an annual balance schedule.

Check the gross-income ratios

Housing including HOA costs $2,269.79 a month. Your chosen housing ratio allows $2,100.00; your total-debt ratio allows $2,350.00 after other debts. Annual gross income needed for both is $97,276.73.

Check the gross-income ratios
Housing capacity from front-end ratio$2,100.00
Housing capacity after other debts$2,350.00
Front-end ratio at the entered rate30.26%
Back-end ratio at the entered rate34.93%
Annual gross income needed$97,276.73

Maintenance and everyday spending are excluded from these mortgage ratios and included in the next check. A negative housing capacity means other debts alone exceed your selected total-debt allowance. Increasing a ratio changes the planning result; it does not create a credit approval.

Check what remains from take-home pay

After everyday spending and other debts, $3,250.00 remains each month. Housing and maintenance cost $2,561.46 at the entered rate and $2,944.62 at the comparison rate. That leaves $688.54 and $305.38, respectively.

Check what remains from take-home pay
Monthly take-home income$5,800.00
Everyday spending and regular saving$2,200.00
Other monthly debts$350.00
Available for ownership$3,250.00
Maintenance allowance per month$291.67
Ownership at the entered rate$2,561.46
Ownership at the comparison rate$2,944.62
Remaining at the comparison rate$305.38

The higher-rate case is a voluntary budget test for a different offer or more expensive financing. An existing fixed-rate loan does not automatically reset to that rate. The price ceiling requires the comparison budget to fit; gross-income ratios are tested at the entered rate. Setting the uplift to zero makes the two payment cases equal.

Check cash without using your reserve

The $70,000.00 down payment, $10,500.00 estimated closing costs and $1,000.00 other purchase expenses require $81,500.00. You have $90,000.00 after the reserve. This is total cash committed, without subtracting a deposit already paid.

Check cash without using your reserve
Total available savings$100,000.00
Reserve retained$10,000.00
Cash available for purchase$90,000.00
Down payment$70,000.00
Estimated closing costs$10,500.00
Other purchase expenses$1,000.00
Total purchase cash required$81,500.00
Cash shortfall$0.00

Use the closing-cost percentage as an inclusive estimate for lender, title, government, prepaid and initial escrow charges. Do not put those costs in the other-expenses field again. Moving, immediate work and other expenses outside that estimate belong in the separate field. Monthly taxes and insurance describe the ongoing budget; initial escrow describes money tied up at purchase.

Which home price fits this scenario?

Maximum price in the model
$321,965.78

The highest price in this scenario is $321,965.78. The limiting factor is the gross-income ratios. The search keeps your down-payment percentage and every other assumption fixed.

The search changes only price and the amounts linked to price: loan, down payment, property tax, PMI, maintenance and estimated closing costs. It keeps your down-payment percentage, income, spending, insurance, HOA and other cash expenses fixed. It does not optimize the down payment or choose a loan program. The result is capped by the displayed model range; zero means no purchase in that range passes.

Check the home price you entered

The purchase exceeds your scenario

Gross-income ratios: not met. Take-home budget at the comparison rate: met. Cash and reserve: sufficient. Shortfalls are $7,276.73 annual gross income, $0.00 monthly take-home income and $0.00 cash. The income gaps are separate checks and are not added together.

Turn the estimate into a property-specific decision

A useful next step is to gather the tax estimate, insurance quotes, HOA documents and Loan Estimate for the same property and loan. Replace broad allowances with those figures, then repeat the scenario. If net spending is the limiting factor, increasing the lender ratio will not repair it. If cash is limiting, a smaller down payment may release funds but increase the loan and introduce PMI.

This article does not model FHA upfront or annual MIP, VA funding fees, USDA fees, assistance programs, subordinate financing, points financed into the loan, balloon payments or adjustable-rate qualification. Use the linked mortgage calculator to explore the available program comparison. A cash purchase with a one-hundred-percent down payment bypasses the mortgage-ratio test here, while ownership costs and purchase cash still have to fit.

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Frequently asked questions

Does this estimate mean a lender will approve the loan?
No. The page tests your chosen ratios, household budget and cash assumptions. Approval also depends on verified income, credit, appraisal, property and loan-program requirements.
Does changing gross income change take-home income?
No. Both income fields remain independent. The article does not calculate income tax.
Is a twenty-percent down payment required to buy?
No. It is the PMI threshold used by this conventional-loan example, not a universal minimum down payment. Eligibility and insurance depend on the actual loan.
Does the higher-rate case predict my fixed mortgage changing?
No. It compares the initial loan with an alternative rate for planning. It is not a forecast of a fixed-rate payment reset.
Does the cash check subtract earnest money already paid?
No. It checks total funds committed to the purchase. Use the cash-to-close article or disclosure to reconcile what remains due on closing day.
What if my reserve is larger than savings?
The cash check fails. Both values remain entered, and only the most recently edited field and its existing reserve rule are highlighted.
Why can the maximum price differ from the mortgage calculator?
This article combines chosen gross-income limits, a take-home budget including maintenance, a higher-rate comparison and a reserve-adjusted cash check. Different program or cost assumptions produce different results.