How lenders decide what you can afford
Lenders look at two ratios. The front-end ratio is your housing payment (principal, interest, taxes, insurance and HOA) divided by your gross monthly income. The back-end ratio, or debt-to-income (DTI), adds all your other monthly debts. The traditional limits are 28% and 36%. Many conventional, FHA and VA programs allow a back-end DTI of 43% or higher for strong applicants.
This calculator finds the highest home price whose full monthly payment fits under that limit, given your down payment, rate, taxes and insurance.
Ways to afford more house
- Pay down debts before applying. Every $100 of monthly debt you remove can add roughly $15,000 or more of buying power.
- Raise your credit score to qualify for a lower rate.
- Save a bigger down payment to lower the loan and avoid PMI.
- Look at first-time buyer and down payment assistance programs in your state.
Affordable vs. comfortable
The maximum a lender approves is not always what feels comfortable. Leave room for maintenance (often 1% to 2% of the home value per year), an emergency fund, retirement savings and lifestyle costs. Many buyers aim below the maximum on purpose.
Frequently asked questions
How much house can I afford on $100,000 a year?
With modest debts, 20% down and a rate around 6.5%, many buyers can afford roughly $350,000 to $450,000. Your result depends on your debts, taxes, rate and down payment, so enter your numbers above.
What is a good debt-to-income ratio?
Below 36% is considered healthy. Many lenders approve up to 43%, and some programs go to around 50% with strong credit or large cash reserves.
Does this include PMI?
No. If your down payment is below 20%, add an estimate for PMI to the insurance field to get a more accurate result.
Should I use gross or net income?
Lenders use gross (pre-tax) income, so this calculator does too. For your own budget, it also helps to check the payment against your take-home pay.
This is an estimate, not a pre-approval. Lender rules vary by loan type, credit score and reserves.