How Much House Can I Afford?

The generic calculators assume one income and ignore student loans, childcare costs, and the fact that buying a bigger house means less money for 529s and retirement. This calculator uses the lender 28/36 rule but shows the full family financial picture — including what you'll have left over for everything else.

Combined annual gross income ($) Add both earners' W-2 wages before taxes. Include bonus if reliably received; exclude it if variable.

Monthly debt payments ($) Car loans + student loan minimums + credit card minimums. Do NOT include any current mortgage or rent — only the debts that will continue after you buy.

Down payment saved ($) Cash available for down payment and closing costs. Closing costs typically run 2–3% of the purchase price; the calculator reserves that separately if you enter a target below.

Mortgage interest rate (%) Use a current 30-year fixed quote for accuracy. Check lender sites or Bankrate for today's rates.

Annual property tax rate (%) National average is ~1.1%. NJ/IL/TX run 2–3%; CA/HI are under 0.5%. Use your target area's rate. County assessor websites publish mill rates.

Monthly HOA ($) Enter $0 for single-family homes without an HOA. Lenders count HOA in the front-end ratio.

Current monthly savings toward this goal ($) Used only to estimate how long until you reach 20% down — does not affect the affordability calculation.

The 28/36 rule — what lenders actually check

Mortgage lenders underwrite using two debt-to-income ratios:

Front-end ratio (housing ratio): 28%. Your total monthly housing cost — principal, interest, property taxes, homeowner's insurance, and HOA — should not exceed 28% of gross monthly income. This is the primary constraint for most families.
Back-end ratio (total DTI): 36–43%. All monthly debt payments (housing + car loans + student loans + credit cards + any other installment debt) divided by gross monthly income. Conventional loans prefer 36%; most lenders allow up to 43% under the Qualified Mortgage rule¹, and some high-balance loans go to 45% with compensating factors.

The binding constraint is whichever ratio caps you first. For families with substantial student loan or car loan payments, the back-end ratio often limits more than the front-end.

Dual-income considerations generic calculators miss

One-income stress test. Lenders qualify you on combined income, but life doesn't always cooperate. If one parent takes parental leave, reduces hours, or leaves the workforce, can you still make payments? A common rule of thumb: size your mortgage so the higher earner alone could cover PITI on ~40% of gross income in a pinch — uncomfortable but survivable for 12–18 months.

Childcare as a shadow debt payment. Daycare at $2,000–$3,000/month for an infant doesn't show up in DTI ratios, but it's a fixed monthly outflow that competes directly with mortgage payments. Lenders don't count it; your budget does. Build it into your own back-of-envelope calculation even if the bank ignores it.

Credit score matters — whose to use. Joint mortgages use the lower of the two middle scores. If one spouse has a significantly lower score, you may get a better rate qualifying on the higher earner's income alone — but that limits the loan to one income. Run both scenarios with your lender before applying.

PMI: the cost of less than 20% down

Private mortgage insurance (PMI) is required by conventional lenders when you put down less than 20%. It typically runs 0.5%–1.5% of the loan amount annually (0.85% is a common midpoint)², added to your monthly payment. On a $600,000 loan with 10% down, that's roughly $425/month in PMI alone.

PMI is not permanent. Under the Homeowners Protection Act, lenders must automatically cancel PMI when your loan balance reaches 78% of the original purchase price³. You can request cancellation at 80% LTV with a clean payment history.

PMI is no longer tax-deductible — the deduction expired after 2021 and has not been reinstated.

The mortgage interest deduction — what it actually saves you

Mortgage interest on loans up to $750,000 of acquisition indebtedness is deductible if you itemize⁴ (IRC §163(h)(3)(B)(ii), as amended by TCJA). With the 2026 standard deduction at $32,200 for married filing jointly (and the SALT deduction capped at $40,400 under OBBBA), most families will only benefit from itemizing if mortgage interest + state taxes + charitable giving exceed $32,200.

A $700K mortgage at 6.75% generates roughly $46,900 in interest in year one — likely enough to itemize for families in high-property-tax states. But in a low-tax state with modest charitable giving, the standard deduction may still win. Don't buy a house because of the tax deduction; the tail shouldn't wag the dog.

How home buying competes with 529s and retirement

Buying a house redirects cash in four ways:

Down payment withdrawal: Money sitting in taxable accounts for the down payment isn't compounding toward retirement. At 7% for 10 years, a $100K down payment would have grown to ~$197K.
Closing costs: Typically 2–3% of purchase price. On a $650K purchase, that's $13K–$19.5K out-of-pocket in addition to the down payment.
Higher monthly housing cost: Every dollar above your current rent or prior mortgage is a dollar unavailable for 401(k), Roth IRA, or 529 contributions.
Maintenance reserves: Conventional advice is 1–2% of home value per year for maintenance. Budget this before buying, or the emergency fund will absorb it.

The priority stack before stretching on a house: employer 401(k) match (free money, first), then HSA, then Roth IRA, then any remaining 529 target. Only after those are funded should extra cash flow toward a larger down payment or mortgage principal. See our mortgage payoff vs. investing calculator for the math.

How much down payment do you actually need?

Minimum: 3% for a conventional conforming loan (Fannie/Freddie) with PMI. 3.5% for FHA. 0% for VA and USDA if eligible.

Optimal target: 20%, which eliminates PMI and produces a meaningfully lower monthly payment. The break-even on saving more vs. buying sooner depends on home price appreciation in your market and what the down payment money earns in the meantime — the bigger house vs. retirement calculator models this tradeoff.

Closing costs (2–3%) must come from additional cash on top of the down payment. First-time buyers often underestimate this. Budget $15,000–$25,000 in closing costs for a $600K–$800K purchase.

Related tools

Mortgage Payoff vs. Investing Calculator — once you own, should extra cash go toward principal or investments?
Bigger House vs. Retirement Calculator — opportunity cost of upgrading vs. staying and investing the difference
Family Budget Planner — make sure the new PITI fits your monthly cash flow before committing
Emergency Fund Calculator — homeowners need a larger emergency fund (HVAC, roof, plumbing)
Estate Planning for Families — update your will and beneficiary designations after closing

Run the full scenario with a fee-only advisor

The calculator gives you the lender limit. A fee-only financial planner models the full picture: what size mortgage leaves you on track for retirement, whether to accelerate the down payment or keep investing, and how the house fits your 10-year cash flow plan. No commission. No product to sell. Free match.

CFPB, "Ability-to-Repay and Qualified Mortgage Standards Under the Truth in Lending Act (Regulation Z)" — consumerfinance.gov. QM safe harbor DTI: 43% back-end. Values verified 2026.
Urban Institute, "Decoding PMI: An In-Depth Analysis of Private Mortgage Insurance" — rate range 0.5%–1.5% of loan balance annually. Values verified 2026.
Homeowners Protection Act of 1998 (12 U.S.C. § 4901 et seq.) — automatic PMI cancellation at 78% LTV. Law has not changed.
IRS Publication 936 (2025), "Home Mortgage Interest Deduction" — $750,000 acquisition indebtedness limit for loans originated after December 15, 2017. Standard deduction $32,200 MFJ 2026 from IRS Rev. Proc. 2025-32; SALT $40,400 MFJ from OBBBA (2025). Values verified 2026.

Sources verified May 2026. Tax values reflect 2026 tax year.