Home Affordability Calculator
Determine how much home you can afford based on income and debts.
How it works (Formula)
Max Monthly Debt = Monthly Income * 0.43; Max Mortgage = Max Monthly Debt - Existing Debts What Is the Home Affordability Calculator?
The Home Affordability Calculator is a critical tool for anyone starting their home search. It calculates the maximum home price you can comfortably afford based on your household income, monthly debts, and available cash for a down payment. Instead of just guessing what you can borrow, this tool uses real lender math to give you a safe target price.
What makes the Nuumra version better is our strict adherence to the "28/36 rule" while factoring in property taxes and insurance. We provide you with a "safe zone" for your monthly payment, ensuring you don't become "house poor" after closing the deal.
How to Use the Home Affordability Calculator
- Gross Annual Income — Enter your total yearly pre-tax household income.
- Total Monthly Debts — Enter the sum of all your monthly loan commitments (e.g., car payments, student loans, credit card minimums).
- Available Down Payment — Enter the total amount of cash you have saved for the initial purchase.
- Interest Rate — Enter the current market interest rate for a 30-year fixed mortgage.
- Click Calculate — Press the Determine Affordability button to see your maximum home price.
How the Home Affordability Formula Works
Lenders typically use two primary ratios to determine how much they will lend you:
Max Total Debt = (Gross Monthly Income × 0.36) − Existing Debts
- PITI — Principal, Interest, Taxes, and Insurance.
- Gross Monthly Income — Your total pre-tax earnings divided by 12.
- DTI (Debt-to-Income) Ratio — The percentage of your income that goes toward paying off debts.
Example: If your household earns $100,000 annually ($8,333/mo) and you have $500 in debts, a lender might allow a maximum PITI of $2,333 (28% of income), provided your total debts don't exceed $3,000 (36% of income).
Understanding Your Home Affordability Results
Once you hit Calculate, here is what each result means:
- Max Home Price — The highest reasonable purchase price for a property based on your data.
- Estimated Loan Amount — The total amount of money you would need to borrow from a bank.
- Max Monthly Mortgage Payment — Your estimated full PITI payment at the loan's limit.
- DTI Ratio — Your total monthly debt obligations divided by your gross monthly income.
Tips to Get the Most Out of the Home Affordability Calculator
- Consider Your Net Income — While lenders use gross income, you should look at your actual take-home pay to ensure you are comfortable.
- Lower Your Debts — Paying off a car or credit card can significantly increase the maximum mortgage you qualify for.
- Buffer for Expenses — Don't forget that owning a home comes with maintenance and utility costs; don't push your budget to the absolute limit.
- Get Pre-Approved — While this calculator is accurate, a lender will consider your credit score and work history for final approval.