House Affordability Calculator

Q: What does PITI stand for and why is it important?

PITI stands for Principal, Interest, Taxes, and Insurance. It's crucial because it represents your total monthly housing cost. Principal reduces your loan balance, Interest is the cost of borrowing, Taxes are for local government, and Insurance protects your property.

Q: How can I increase my home affordability?

You can increase your affordability by reducing your debt (to lower your DTI), increasing your documented income, saving a larger down payment (to avoid PMI), and improving your credit score to qualify for lower interest rates.

Q: Should I choose a 15-year or 30-year loan term?

A 30-year loan offers a lower monthly payment, increasing affordability for a more expensive home. A 15-year loan has higher payments but builds equity faster and saves a massive amount on interest. Use the calculator to compare both options for your budget.

Dreaming of a new home but feeling overwhelmed by the numbers? You're in the right place. This simple, powerful calculator gives you a clear, realistic estimate of how much house you can comfortably afford in 2025. Move beyond guesswork and take the confident first step toward homeownership.

Annual Gross Income

Total Monthly Debts

Down Payment

Mortgage Interest Rate

Loan Term

Property Tax (Annual)

Insurance (Annual)

PMI (Annual)

Housing DTI Ratio: 28%

Total DTI Ratio: 36%

A Clear Path to Your Home Budget in 3 Steps

Our calculator helps you understand what lenders see by focusing on the key factors that determine your home-buying power. Here’s how to get a reliable estimate in seconds.

Step 1: Your Financial Snapshot: In the first section, enter your `Annual Gross Income` (your income before taxes) and your `Total Monthly Debts`. This includes minimum payments for credit cards, car loans, student loans, or any other recurring debts.
Step 2: Down Payment & Loan Details: Provide your saved `Down Payment` amount. A larger down payment can significantly increase your affordability. Then, input the current `Mortgage Interest Rate` you expect to get and select a `Loan Term` (30 years is most common).
Step 3: Fine-Tune Your Estimate: Adjust the sliders for the `Housing DTI Ratio` (front-end) and `Total DTI Ratio` (back-end). The 28/36 rule is a standard guideline, but you can adjust these based on your comfort level or lender's requirements. Click "Calculate Affordability" to see your results!

Understanding Your Affordability Results

The number you see isn't just a guess—it's an estimate based on the same standards lenders use.

Affordable Home Price: This is the total estimated value of a home you could likely get approved for, including your down payment.
Estimated Monthly Payment: This is your PITI (Principal, Interest, Taxes, and Insurance), the total amount you'd pay each month. The charts break this down so you can see exactly where your money goes.

Frequently Asked Questions (FAQ) for Smart Homebuyers

What is a good Debt-to-Income (DTI) ratio?

A DTI ratio below 36% is generally considered ideal by lenders, as it shows you have a healthy balance between your income and expenses. However, some loan types (like FHA loans) may allow for a DTI as high as 43% or even 50% if you have other strong factors like a high credit score or large cash reserves.

What does PITI stand for and why is it important?

PITI stands for Principal, Interest, Taxes, and Insurance. It's crucial because it represents your total monthly housing cost, not just the loan repayment.

Principal: The portion of your payment that reduces your loan balance.
Interest: The cost of borrowing the money from the lender.
Taxes: Property taxes required by your local government.
Insurance: Homeowner's insurance to protect your property.

How can I increase my home affordability?

You have several levers to pull:

Reduce Debt: Pay down high-interest credit cards or personal loans to lower your DTI ratio.
Increase Income: If possible, document all sources of income, including part-time work or bonuses.
Save a Larger Down Payment: A down payment of 20% or more helps you avoid Private Mortgage Insurance (PMI), lowering your monthly payment.
Improve Your Credit Score: A higher credit score qualifies you for lower interest rates, which directly boosts your buying power.

Should I choose a 15-year or 30-year loan term?

A 30-year loan offers a lower monthly payment, making it easier to afford a more expensive home. However, you'll pay significantly more interest over the life of the loan. A 15-year loan has higher monthly payments but builds equity faster and saves a massive amount on interest. Use our calculator with both terms to see the impact on your monthly budget.