Faro Labs / Tools / Home affordability calculator
Home affordability calculator
How much house can you actually afford? Work backward from your income, debts, and down payment to a maximum price and a comfortable monthly payment: the full PITI, not just principal and interest.
On $120,000 of income with $600/mo of other debt, staying under a 36% total debt-to-income leaves about $3,000/mo for housing, which supports roughly a $455,000 home at these terms.
How affordability is calculated
max price = the price whose full PITI payment fits that budget
Affordability runs the mortgage backward. Instead of starting from a price and finding the payment, it starts from your income, subtracts your existing debts, and asks what price produces a payment that fits inside a safe debt-to-income ratio. The classic guideline is 28/36: housing under 28% of gross income, all debt under 36%. Lenders will often approve you well above that, but approvable and comfortable are different numbers, and the gap is where people get house-poor.
Why existing debt matters so much
Every dollar of car payment or student loan comes straight out of your housing budget, because lenders cap total debt against income. A $600 monthly car payment can lower your maximum price by tens of thousands. Paying down or eliminating a loan before you buy is often the fastest way to afford more house.
Don't forget taxes and insurance
The qualifying payment is the full PITI. In a high-tax state, property tax alone can be a third of the payment, so a price that looks affordable on principal and interest can blow past your DTI once taxes and insurance are added. This calculator includes both.
Affordability questions
How much house can I afford on my income?
A common guideline is that total housing costs stay under 28 percent of gross monthly income and all debt payments under 36 percent. Lenders often allow higher, up to 43 percent or more, but the conservative figure is what keeps the payment comfortable rather than merely approvable. Adjust the DTI field to see both.
What's the difference between front-end and back-end DTI?
Front-end debt-to-income counts only housing costs against your income. Back-end counts all debt: housing plus car loans, student loans, and credit cards. Lenders care most about the back-end ratio, so existing debt directly reduces what you can borrow, dollar for dollar.
Does affordability include taxes and insurance?
It should, and this one does. The payment a lender qualifies you on is the full PITI, principal, interest, taxes, and insurance, plus HOA where it applies. Budgeting off principal and interest alone overstates what you can afford, sometimes badly in high-tax areas.
Every calculator
Buying it to rent out?
Faro flips the question from "can I afford it" to "does it pay for itself": paste a listing for the full underwrite.
Estimates for analysis and educational use only: not financial, investment, tax, or legal advice. Verify every number independently before making a purchase decision.