What Can I Afford?

Curious about what you can comfortably afford considering your income, monthly debts, and savings? Discover a rough estimate to kickstart your search.

What Can Affect Affordability

Annual income

This is the total amount of money earned for the year before taxes and other deductions. You can usually find the amount on your W2 form. If you have a co-borrower who will contribute to the mortgage, combine the total of both incomes to get your annual income.

Total monthly debts

These are recurring monthly expenses like car payments, minimum credit card payments or student loans. You can adjust this amount in our affordability calculator as needed. For example, if you have a $250 monthly car payment and $50 minimum credit card payment, your monthly debt would be $300.

Down payment

The amount of money you spend upfront to purchase a home. Most home loans require a down payment of at least 3%. A 20% down payment is ideal to lower your monthly payment, avoid private mortgage insurance and increase your affordability. For a $250,000 home, a down payment of 3% is $7,500 and a down payment of 20% is $50,000.

Debt-to-income ratio (DTI)

The total of your monthly debt payments divided by your gross monthly income, which is shown as a percentage. Your DTI is one way lenders measure your ability to manage monthly payments and repay the money you plan to borrow. Our affordability calculator will suggest a DTI of 36% by default.

Interest rate

The amount that a lender charges a borrower for taking out a loan. Typically, the interest rate is expressed as an annual percentage of the loan balance. The borrower makes payments (with interest) to the lender over a set period of time until the loan is paid in full. Our affordability calculator uses the current national average mortgage rate. Your interest rate will vary based on factors like credit score and down payment.

Loan term

The length by which you agree to pay back the home loan. The most common term for a mortgage is 30 years, or 360 months, but different terms are available depending on the type of home loan that works best for your situation. You can edit your loan term (in months) in the affordability calculator's advanced options.

Property tax

When owning a home, you pay annual property taxes based on the assessed value of the property or purchase price of the home, which can affect your affordability. The tax rate you pay can vary by state, county and municipality. Our calculator assumes a property tax rate by default, but you can edit this amount in the calculator's advanced options. To obtain a more accurate total payment amount, get pre-qualified by a lender.

Homeowner's insurance (HOI)

Also known as homeowner's insurance is a type of property insurance that covers a private residence. Typically, HOI is required to get a home loan. The cost may vary depending on your location, type of coverage, any discounts you qualify for and your insurance provider. Generally, homeowner's insurance costs roughly $35 per month for every $100,000 of the home's value. Consult your insurance carrier for the exact cost. You can edit the calculator's default amount in the advanced options.

Private mortgage insurance (PMI)

Many lenders commonly require private mortgage insurance if a borrower contributes less than a 20% down payment on a home purchase. PMI protects the lender against losses that may occur when a borrower defaults on a mortgage loan. Our calculator bases the PMI on the home price and down payment amount. You can choose to include or exclude PMI in the advanced options of the affordability calculator.

Homeowner's Association (HOA) dues

Some communities, such as condominiums and townhomes, are governed by a homeowner's association (HOA) that maintains communal areas and enforces rules and regulations for a monthly fee. Any HOA dues you pay each month can affect your affordability. You can edit this number in the affordability calculator advanced options.