Affordability Calculators: How Much Can You Afford?

Introduction

One of the first questions homebuyers ask is: How much house can I afford? An affordability calculator gives you a quick estimate based on your income, debts, and savings. Let’s look at how these calculators work and how to use them to set a smart budget.

How Affordability Calculators Work

Most calculators factor in:

• Income: Your monthly earnings. Your earnings, along with credit score tips, influence what lenders offer.
  
• Debts: Credit cards, student loans, car payments, and other obligations.
  
• Down Payment: Larger down payments lower monthly costs. Pairing a calculator with down payment options makes results more accurate.
  
• Interest Rates: Rates depend on your credit score and market conditions.

The 28/36 Rule

Lenders often use the 28/36 rule:

• No more than 28% of gross income on housing.
  
• No more than 36% of income on total debts.

Example Calculation

If you earn $6,000/month and have $500 in debt:

• Max housing = $1,680 (28%).
  
• Max debt = $2,160 (36%).
  This means your total housing and debt combined should not exceed $2,160.

Why Pre-Approval Still Matters

Calculators are great for estimates, but lenders use stricter qualifications. Use this alongside our loan pre-approval checklist to confirm results.

Final Thoughts

Affordability calculators are a smart starting point for your home search. They give clarity and direction, but don’t forget that lenders may adjust based on credit, debt, and down payment. Affordability calculators give you a starting point, but your financial health matters too. Boost your score with credit score tips, plan for down payment options, and follow our loan pre-approval checklist to be fully prepared.