What the house affordability calculator tells you
A home affordability calculator estimates the highest purchase price you can responsibly afford based on your income, existing debts, and down payment — not just the loan a bank might approve. It centers on your debt-to-income (DTI) ratio: the share of your gross monthly income that goes to debt payments.
This tool first sets a housing budget — your income times the DTI limit, minus your other monthly debts — then searches for the price whose full monthly payment (principal, interest, property tax, insurance, and HOA) exactly fills that budget. It also reports a more comfortable price using the conservative 28% front-end rule.
Knowing your number before you shop keeps you focused on homes you can actually close on — including off-market Miami listings that move quickly when a qualified buyer steps up.
How it works
- Maximum housing payment = gross monthly income × DTI limit % − your total monthly debts.
- The tool binary-searches the purchase price whose full PITI payment — P&I + property tax + insurance + HOA — equals that maximum housing payment.
- P&I comes from the standard mortgage formula on (price − down payment); tax and insurance are applied as annual rates on the price (÷12), and HOA is added directly.
- A second, more conservative price is computed at the 28% front-end rule, where housing alone stays under 28% of income.
- Raise the down payment, lower your debts, or change the rate and the affordable price updates.
Frequently asked questions
How much house can I afford on my salary?
A common rule is that your total monthly home payment should stay around 28% of your gross monthly income, and all debts combined under about 36–43%. On a $120,000 salary ($10,000 a month), that points to roughly $2,800 a month for housing, which then maps to a price based on your rate, taxes, and down payment.
What is the 28/36 rule?
The 28/36 rule says your housing payment should not exceed 28% of gross monthly income (the front-end ratio) and your total debt payments should not exceed 36% (the back-end ratio). It’s a long-standing guideline for keeping a mortgage comfortable, though many loan programs allow higher back-end ratios.
What debt-to-income ratio do lenders allow?
Conventional loans often allow a back-end DTI up to about 43%, and some programs stretch to 50% with strong compensating factors like reserves or a high credit score. FHA loans can also go higher. A lower DTI generally means easier approval and better terms.
How does my down payment affect what I can afford?
A bigger down payment shrinks the loan, so the same monthly budget supports a higher purchase price — and at 20% down you also drop PMI, freeing more of your payment for principal and interest. The calculator re-runs the price every time you change the down payment.
How much income do I need to buy a $1 million home in Miami?
On a $1,000,000 home with 20% down at 6.5% over 30 years, principal and interest run about $5,050 a month, and property tax, insurance, and HOA can add a few thousand more. To keep that near a 28% housing ratio, you’d typically need roughly $300,000+ in annual income, depending on your other debts.
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