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.
Your questions, answered
How do affordability calculators work?
They use your income, debts, credit, and down payment to estimate how much house you can afford.
Are affordability calculators accurate?
They give a good starting point, but lenders may use stricter criteria.
What’s the 28/36 rule in affordability?
It suggests you spend no more than 28% of income on housing and 36% on total debt.
