How much house can I afford calculator
Lenders cap the share of gross income that can go to debt. Fix that ratio and everything else follows in reverse.
%
%
years
Maximum purchase price
360 601
- Maximum loan
- 300 600.56
- Monthly budget for principal and interest
- 1900.00
- Total monthly housing cost
- 2300.00
- Housing cost as a share of gross income
- 30.67 %
Show the working
- Gross annual income = 90 000
- Other monthly debt payments = 400
- Maximum debt-to-income ratio = 36
- Annual interest rate = 6.5
- Term = 30
- Monthly tax and insurance = 400
- Deposit available = 60 000
- monthly_income = 90 000 / 12 = 7500
- Monthly budget for principal and interest = max(7500 * 36 / 100 - 400 - 400, 0) = 1900
- i = 6.5 / 100 / 12 = 0.005 416 67
- n = 30 * 12 = 360
- growth = (1 + 0.005 416 67)^360 = 6.9918
- Maximum loan = 0.005 416 67 == 0 ? 1900 * 360 : 1900 * (6.9918 - 1) / (0.005 416 67 * 6.9918) = 300 601
- Maximum purchase price = 300 601 + 60 000 = 360 601
- Total monthly housing cost = 1900 + 400 = 2300
- Housing cost as a share of gross income = 7500 > 0 ? 2300 / 7500 * 100 : 0 = 30.6667
Values are shown to six significant figures here; the arithmetic itself runs on exact fractions and is only rounded where a number is printed.
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The formula
- monthly budget = gross monthly income x DTI limit - other debts - tax and insurance
- maximum loan = budget x ((1+i)^n - 1) / (i (1+i)^n)
The 36% total DTI and 28% housing ratio are conventional US underwriting rules, not laws. Lenders vary and so do countries.
Being approved for an amount is not the same as it being wise to borrow it.
This is arithmetic, not financial advice. Real products carry fees, tax treatment and terms that no formula captures.