What you need
Your gross annual income, your monthly debt payments, an estimate of the interest rate you might be offered, and how much cash you have for a down payment. The calculators run in your browser and store nothing.
A worked example
This example uses a 90,000 annual income, 400 of other monthly debt, a 30-year loan at an assumed 6.5% (an illustration, not a forecast) and 450 a month for property tax, insurance and HOA.
| Step | Calculation | Result |
|---|---|---|
| Gross monthly income | 90,000 ÷ 12 | 7,500 |
| Front-end limit (28%) | 7,500 × 0.28 | 2,100 |
| Back-end limit (36%) minus debts | 7,500 × 0.36 − 400 | 2,300 |
| Housing budget | smaller of the two | 2,100 |
| Left for principal and interest | 2,100 − 450 | 1,650 |
| Payment per 100,000 borrowed at 6.5%, 30 years | standard amortisation formula | 632.07 |
| Loan that budget supports | 1,650 ÷ 632.07 × 100,000 | about 261,048 |
| Price with a 10% down payment | 261,048 ÷ 0.90 | about 290,053 |
At 7.5% instead of 6.5% the payment per 100,000 is 699.21, and the same budget supports a loan of only about 235,979, around 25,069 less. Small changes in the rate move the price noticeably, which is why stress-testing matters.
The House Affordability Calculator gives a similar answer once you enter the same numbers, and shows the monthly cost split. Its result will differ slightly because it also handles maintenance and its own tax and insurance inputs.
Common pitfalls
- Forgetting everything but the mortgage. Property tax, insurance, HOA and maintenance can add hundreds a month.
- Counting only the down payment. Closing costs also need cash on the closing day.
- Using a single rate. Test at least one higher rate before deciding.
- Treating the lender maximum as the target. Leave room in the budget for repairs, savings and life changes.
- Ignoring utilization. For example, balances of 1,200, 450 and 2,800 on limits of 5,000, 2,000 and 8,000 total 4,450 of 15,000, or 29.7% overall, near the usual 30% guideline. A single card near its limit can still hurt a score.
Going further
How the payment is split between interest and principal is explained in How Loan Amortization Works, and the options for different mortgage types in How Different Loans Work.