Home Affordability Calculator

Lenders use the 28/36 rule to assess how much house you can afford. It says: (1) your monthly housing costs (mortgage P&I + property tax + insurance + PMI) should not exceed 28% of gross monthly income, and (2) your total monthly debt obligations (housing + car loans + student loans + credit card minimums) should not exceed 36% of gross income. These are guidelines — some lenders approve up to 43–50% back-end ratios for strong borrowers.

20% down avoids PMI and gives you immediate equity cushion, but it's not required. Many first-time buyers use 3–10% down through FHA loans (3.5% minimum) or conventional loans with PMI. The trade-off: a lower down payment means PMI costs (typically $50–200/month) and higher monthly payments, but you can buy sooner and keep cash for emergencies. Aim for at least 5–10% if you can't reach 20%.

Beyond PITI (principal, interest, taxes, insurance), budget for: closing costs (2–5% of purchase price), moving costs, immediate repairs/updates, ongoing maintenance (set aside 1–2% of home value annually), and HOA fees if applicable. First-time buyers are often surprised by these additional costs — the purchase price is just the beginning.

Timing the market is difficult. Focus on: (1) Do you have a stable income and emergency fund? (2) Do you plan to stay 5+ years? (Rule of thumb: you need ~5 years to break even vs. renting due to transaction costs.) (3) Does your monthly mortgage + expenses compare favorably to renting in your area? If all three boxes are checked, buying may make sense regardless of rate environment.