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Home affordability calculator

Use our free home affordability calculator to help estimate how much you might be able to afford. Change the default values to make the results more personal to you.

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How much home can you afford?

When you’re thinking about buying a home, figuring out how much you can afford is a great first step. Use our home affordability calculator to get an estimate!

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This calculator is made available as a self-help tool for your personal use. We do not guarantee its accuracy or applicability to your individual circumstances. Resulting calculations are for illustrative and informational purposes only and are not intended as investment or financial advice. Consult a qualified financial advisor before making important personal finance decisions. To get a better understanding of the benefits of buying a home, speak with a loan advisor at Freedom Mortgage.

You can afford a home worth up to {{firstNumber}}
With a monthly payment of {{secondNumber}}

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Talk to Freedom Mortgage about home affordability today

About home affordability

When you are thinking about shopping for a new home, understanding how much you can afford is a great place to start. That’s why we offer this free home affordability calculator. Our calculator will help you estimate the price of homes that fit within your budget. Keep in mind the calculator just provides a general estimate. To get a better sense of how much home you can afford, consider getting pre-qualified or pre-approved for a loan with Freedom Mortgage.

Pre-qualifying is a simpler process than pre-approval. We’ll give you an estimate of how much home you might be able to afford based on the answers to financial questions we ask. Pre-approval will require you to provide us with financial documents so we can estimate a mortgage amount we are likely to approve. Pre-approval can give you a more precise estimate of the home prices you can afford and can help make your offer attractive to sellers, because they will have confidence you will be approved for a mortgage to buy their homes!

Our home affordability calculator uses your annual gross income as the starting point for its estimate. Then it takes into account these important financial factors.

These are your monthly debt payments besides your mortgage such as car payments, student loans, and credit card debt. Lenders want to know you will be able to afford all your monthly debt payments – not just your monthly mortgage payment – before they approve your loan.

We often do this by calculating your debt-to-income ratio (DTI) and applying a maximum to the result. Let’s do a sample calculation. Pretend your monthly gross income is $7,000, you pay $800 a month for a car loan and student debt, and you want to buy a house that has a $1,700 monthly payment. This means your total monthly debt would be $2,500.

To calculate your DTI, divide your total monthly debt by your monthly income and express the result as a percentage. In our example, that result is 36% ($2,500 ÷ $7,000 = 0.36 or 36%). This is important because many lenders have a maximum debt-to-income ratio of 36%. So your total debt and debt-to-income ratio are important to understanding how much home you can afford and how large a mortgage you might be able to get.

Your down payment is an important factor because the larger your down payment, the more house you may be able to afford. It’s often not necessary to make a 20% down payment when you buy a house. If you choose an FHA loan, you may be able to make a down payment as low as 3.5%.

If you choose a conventional loan, you can often make a down payment of less than 20%. However, you will be required to buy private mortgage insurance (PMI) with a down payment of less than 20%. The cost of PMI is added to your monthly bill and will increase your mortgage payment.

Your mortgage term is the number of years you have to pay the loan back. When you get a 30-year mortgage, you have 30 years to pay back the loan. 30-year mortgages can make homes more affordable by lowering your monthly payment. However, 30-year mortgages typically cost you more money in interest payments over the life of the loan compared to mortgages with terms of 20 or 15 years.

Your interest rate is the cost of borrowing money expressed as a percentage. Interest rates have a big impact on home affordability. When mortgage rates are higher, homebuyers can typically afford less expensive homes. When rates are lower, homebuyers can often afford more expensive homes. Basically, your money goes further in a low rate environment.

The cost of your property taxes and homeowners insurance are included in your monthly mortgage payment. Buying a home in a community with higher property taxes might affect the price of the home you can afford. Shopping for more affordable homeowners insurance might help you afford a higher priced home.

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