To calculate “how much house can I afford”, a good rule of thumb is to use the 28% / 36% rule, which states that you should not spend more than 28% of your gross monthly income on related expenses. at home and 36%% on total debt, including your mortgage, credit cards, and other loans like car and student loans.

Example: If you earn $ 5,500 per month and have $ 500 in debt repayments, your monthly mortgage payment for your home should not be more than $ 1,480.

The 28% / 36% rule is a widely accepted starting point for determining the affordability of a home, but you’ll always want to take your entire financial situation into account when determining how much you can afford the home. allow yourself.

The key factors in calculating affordability are 1) your monthly income; 2) cash reserves to cover your down payment and closing costs; 3) your monthly expenses; 4) your credit profile.

  • Returned – Money that you receive on a regular basis, such as your salary or investment income. Your income helps establish a baseline for what you can afford to pay each month.
  • Cash reserves – This is the amount of money you have available to make a down payment and cover closing costs. You can use your savings, investments or other sources.
  • Debt and Expenses – Monthly obligations you might have such as credit cards, car payments, student loans, groceries, utilities, insurance, etc.
  • Credit profile – Your credit score and the amount of debt you owe will influence a lender’s opinion of you as a borrower. These factors will help determine how much money you can borrow and the mortgage interest rate you will win.


For more information on home affordability, read the total costs to consider when buying a home.

The affordability calculator will provide you with an appropriate price range based on your situation. Most importantly, it takes into account all of your monthly obligations to determine if a home is comfortably within financial reach.

However, when banks assess your financial capacity, they only take into account your current debts. They don’t take into consideration if you want to set aside $ 250 each month for your retirement or if you are having a baby and want to save additional funds.

NerdWallet’s Housing Affordability Calculator helps you easily understand how taking on mortgage debt will affect your spending and your savings.

Want a quick way to figure out how much home you can afford on a family income of $ 40,000? $ 60,000? $ 100,000 or more? Use our mortgage income calculator to examine different scenarios.

By entering the price of a house, the down payment you intend to pay and an estimate mortgage rate, you can see how much monthly or yearly income you would need – and even how much a lender might qualify you for.

The calculator also answers the question from another angle, for example: What salary do I need to buy a house for $ 300,000?

It’s just another way to familiarize yourself with the purchasing power of a home that you may already have or want to acquire.

You will probably notice that any home affordability calculation includes an estimate of the mortgage interest rate you will be charged. Lenders will determine if you qualify for a loan based on four main factors:

  1. Your debt ratio, as we mentioned earlier.
  2. Your on-time bill payment history.
  3. Proof of stable income.
  4. The amount of down payment you’ve saved, plus a financial cushion for closing costs and other expenses you’ll need to incur as you move into a new home.

If the lenders determine that you are worthy of a mortgage, then they will price your loan. This means determining the interest rate that you will be charged. Your the credit score largely determines the mortgage rate you will have.

Of course, the lower your interest rate, the lower your monthly payment will be.