Interactive real estate analysis
Home Affordability Calculator
Explore a home price based on income, debts and housing costs.
What affordability measures
Affordability translates income, existing debt and housing expenses into an estimated purchase budget. The result depends on both lending ratios and how much cash you can devote to closing without exhausting reserves.
How to Use This Calculator
- Enter gross income and recurring monthly debt payments.
- Set ratio assumptions and estimated taxes, insurance and association costs.
- Include closing cash and reserves when evaluating the price range.
Run Your Numbers
Enter your assumptions below. The calculator provides educational estimates; confirm inputs for your property and financing.
If the calculator does not load, open the calculator in a new tab.
Understand the numbers
Formulas and Assumptions
This guide explains the core calculation methods. The widget’s detailed assumptions and schedules govern its displayed results.
- Gross monthly income = gross annual income ÷ 12
- Housing allowance = gross monthly income × front-end DTI limit
- Total-debt housing allowance = gross monthly income × back-end DTI limit − other monthly debts
- Maximum housing payment = smaller of the two allowances
- Available principal-and-interest payment = maximum housing payment − taxes − insurance − PMI − HOA
How to Interpret the Results
DTI means debt-to-income ratio. Use monthly amounts for all expenses. The loan supported by the available principal-and-interest payment follows the mortgage formula; price also depends on the down payment and available cash for closing. DTI limits are assumptions, not a loan approval.
Use consistent time periods and enter percentages in the format requested by each field. Test conservative assumptions as well as your expected case. Estimates are not a lending commitment or individualized financial, legal or tax advice.
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Detailed Methodology and Model Assumptions
Solving the Maximum Price
Let k be the monthly mortgage payment per dollar borrowed, m the monthly mortgage-insurance rate, t the monthly property-tax rate, D the cash down payment and B the housing budget. With annual insurance I and monthly association dues H: price = (B − I/12 − H + D × (k + m)) ÷ (k + m + t).
This formula assumes a fixed dollar down payment. The calculator tests whether PMI applies at the resulting price. A down-payment threshold can change the applicable branch of the equation; using a single mortgage-only payment multiplier misses that effect.
Check the Ratios and Cash Separately
Housing DTI = total monthly housing cost ÷ gross monthly income. Total DTI = (housing cost + other recurring monthly debt) ÷ gross monthly income. Multiply either ratio by 100 for a percentage.
A ratio-based price estimate does not prove you have enough cash for closing and reserves. Student loans, variable earnings and association charges may be treated differently in an actual application. Compare the affordability result with the closing-cost calculator.
Worked Example
Hypothetical illustration: these figures are separate from the live calculator inputs.
At $8,000 gross monthly income, a hypothetical 28% housing limit allows $2,240. A 36% total-debt limit minus $600 other debt allows $2,280. The smaller allowance is $2,240. Subtracting $500 for taxes and insurance leaves $1,740 for principal and interest before PMI or HOA.
What budget is comfortable?
Build a personal spending plan that includes maintenance, utilities, savings and variable income. A borrowing limit is only one input into a sustainable budget.
Rules of Thumb, and Their Limits
The 28/36 ratios are example assumptions, not universal underwriting rules. Higher taxes, insurance or interest can materially lower the supported price.
Frequently Asked Questions
Is this a preapproval?
No. Only a lender can evaluate your application and issue a lending decision.
Should I use take-home income?
Use gross income where the calculator requests gross income, then check the resulting payment against your actual take-home budget.
Massachusetts and Property-Specific Considerations
Use the municipality’s actual assessed taxes and the property’s current insurance and association costs. Local rent evidence, building condition and the transaction’s legal use matter more than a statewide average. Review current lender or tax requirements where applicable.
Explore Massachusetts investment guides · Use the due diligence checklists · Compare other calculators
Existing Debt Changes the Housing Budget
| Other monthly debt | Housing budget | P&I after $500 property costs |
|---|---|---|
| $300 | $2,240 | $1,740 |
| $600 | $2,240 | $1,740 |
| $1,000 | $1,880 | $1,380 |
| $1,400 | $1,480 | $980 |
Gross income is $8,000 per month with example limits of 28% for housing and 36% for total debt. At low other-debt levels, the housing limit binds. At higher debt levels, the total-debt limit becomes the constraint.
Use the Comparison in Your Decision
Change one assumption at a time in the calculator, record the result and compare it with your base case. Then combine adverse assumptions to see whether the plan still fits your cash reserves and objectives. A useful scenario explains what must remain true for the transaction to work.