Home Affordability Calculator
Discover how much home you can truly afford across three budget tiers — and stress test your payment if mortgage rates rise by 1% or 2%.
Income & Debts
Loan & Home
Taxes & PMI
How to Use
- 1Enter your annual income, existing monthly debts, and available down payment — these three inputs drive the entire affordability calculation.
- 2The three tiers show Conservative (28%), Moderate (32%), and Aggressive (38%) front-end DTI targets — most lenders prefer under 28-31% for comfortable approval.
- 3Use the rate stress test to see how a 1-2% rate increase would affect your monthly payment at the recommended home price — this is your financial buffer check.
- 4Scroll the affordability range table to see the exact monthly payment and FE DTI at any home price — use it to evaluate specific listings.
Example Calculation
Conservative (28% FE)
Moderate (32% FE)
Aggressive (38% FE)
Recommended
Rate Stress Test at $366,868.17
"On a $120,000 income with $50,000 down, the Conservative limit of $366,868 involves PMI (only 13.63% down). To eliminate PMI, you would need a 20% down payment of $73,374 on this home — or reduce the target price to $250,000 where $50,000 = exactly 20% down."
Frequently Asked Questions
Q1: What is the difference between the three affordability tiers?
A1: The three tiers reflect different risk tolerances for housing costs. Conservative (28% FE DTI) is the traditional lender guideline and leaves more income for savings and emergencies — on a $10,000 monthly income, that's $2,800 maximum for housing. Moderate (32%) is what many buyers actually use and is still within conventional approval guidelines. Aggressive (38%) pushes the limits of what lenders allow and leaves little financial buffer if income drops or expenses rise.
Q2: Why is my actual FE DTI higher than my target tier?
A2: When your down payment is less than 20% of the home price, PMI is added to your monthly payment. The home price formula solves without PMI first, then adds PMI based on the resulting loan amount. For example, on the Conservative tier with $50,000 down on a $366,868 home (13.63% down), PMI adds $224.45/month, pushing the actual FE DTI from 28% to 30.24%. To eliminate this gap, either increase your down payment to 20% or choose a lower home price.
Q3: Why does the rate stress test matter?
A3: Mortgage rates fluctuate, and locking in at today's rate is not guaranteed. At a $366,868 home with 7% rate, total housing is $3,024.45 (30.24% FE DTI). If rates rise to 8%, the same home costs $3,241.38/month (32.41% DTI). At 9%, it's $3,465.91 (34.66% DTI). The stress test shows whether you can still comfortably afford your target home if rates increase before you close, or if you need to buy down your rate.
Q4: How does PMI affect my affordability range?
A4: PMI adds 0.85% of your loan annually (or about $177-$495/month in the range table). This significantly increases the effective cost of homes where your down payment is less than 20%. At $300,000, PMI is $177.08/month; at $500,000 it's $318.75. PMI is eliminated once your loan-to-value ratio reaches 80% — either through appreciation, principal paydown, or a larger initial down payment. The range table shows $0 PMI for home prices where $50,000 ≥ 20%.
Q5: How is this different from the Mortgage Affordability Calculator?
A5: The Mortgage Affordability Calculator uses your specific FE and BE DTI limits to calculate one precise max home price. This Home Affordability Calculator shows three tiers side by side (Conservative/Moderate/Aggressive), includes a rate stress test to check your financial buffer, and provides a full payment table across 10+ price points so you can see the exact cost of any specific home you're considering. Use this tool for overall budget planning, and the Mortgage Affordability Calculator for a specific DTI limit.
This calculator provides estimates for informational purposes only. Actual mortgage approval depends on your specific credit score, employment history, and lender-specific guidelines. Consult a licensed mortgage professional before making financial decisions.