How Much House Can I Afford?

How much house you can afford, and how much to save for your down payment

This page answers two related but different questions. The primary one — how much house can I afford? — starts from your savings and income and tells you the maximum home price that fits, combining how large a down payment you could put together with how much a lender would actually approve you for. The secondary one — how much should I save for a down payment? — runs the other direction: if you already have a home price in mind, it calculates the monthly contribution you need to reach that down payment on your timeline.

How the affordable home price is calculated

Two maximum prices are calculated independently, and the lower one wins:

• By your savings: your current savings plus your monthly contribution, compounded over the timeline you set, divided by the down payment % you enter. The down payment is only part of the total price.
• By your income: US lenders size a mortgage using the 28/36 DTI (debt-to-income) rule. Front-end DTI caps your total housing payment — principal, interest, property tax, and PMI, together known as PITI — at 28% of gross monthly income. Back-end DTI caps housing plus all other debt (car loans, student loans, credit cards) at 36% of gross income. Whichever of the two caps is tighter sets your maximum housing payment, and the calculator solves backward from that payment — factoring in the estimated national-average property tax rate (0.99% of home value per year) and PMI if your down payment is below 20% — to find the maximum home price that payment supports.

The price shown is the lower of the two, because both conditions have to hold at once: a large loan approval is worthless without enough saved for the down payment, and vice versa. PMI and property tax both scale with price, so they are built into the income-side math rather than added on afterward — this keeps the DTI cap honest at every price point, not just the final one.

The secondary calculator's formula: solving for the contribution

Starting from the future-value-of-an-annuity formula with an initial balance, the periodic contribution (PMT) is solved for directly:

Where Target is the down payment amount you need, C₀ is your current savings, i is the expected return per period, and n is the number of periods until your target date. If your current savings would already grow, at that return, past the target without any further contribution, the result is a monthly contribution of $0.

A worked example

You want to buy a $350,000 home and need a 20% down payment: $70,000. You already have $10,000 saved, want to get there in 5 years, and your savings earns 4%annually (a typical HYSA/CD range). With these numbers, you'd need to save $871.66/month over the 5 years to reach the $70,000 down payment, accounting for your initial $10,000 also growing at that same rate in the meantime.

Common mistakes when planning your savings

• Forgetting closing costs: on top of the down payment, budget another 2-5% of the price for lender fees, title, escrow, and recording costs.
• Budgeting off take-home pay instead of gross income: lenders qualify you against gross income (the 28/36 DTI rule), which can make a home look more affordable on paper than it feels once taxes and other deductions come out of your actual paycheck.
• Using too optimistic or too risky a return: for savings you will need with certainty in a few years, exposing it to volatile investments can force you to sell at a loss right when you need the cash.
• Setting an unrealistic timeline: if the resulting monthly contribution clearly exceeds what you can actually save, extend the timeline or revisit the target home price instead.
• Forgetting an emergency buffer: committing 100% of your savings capacity to the down payment with no cushion leaves you exposed to any unexpected cost during the process.
• Not revisiting the goal as home prices rise: if you take several years to save, it's common for prices in your target market to rise too. Revisit your target periodically instead of setting it once and never looking again.

Frequently asked questions

What actually moves this number

Specific levers, and roughly what each one is worth. Not “save more” — the things that change the figure above by an amount you can measure.

• Pay off a car loan before you apply, not after

  Monthly debt displaces mortgage capacity one-for-one inside the back-end ratio. Clearing a $450 car payment frees roughly $70,000 of borrowing power at 6.58% over 30 years — usually more than an extra year of down payment saving would.

• Do a three-month dry run of the payment

  Put the difference between your current housing cost and the proposed payment into savings every month for three months. If it is comfortable, the number is real and you have also grown the down payment. If it is not, you learned it for free instead of at closing.

• Run the ratios on net income too

  Lenders use gross. A household approved at a 36% back-end ratio on gross income may be committing over 45% of take-home pay. Recompute both ratios on your actual deposit before deciding what is affordable, as opposed to what is approvable.

• Budget the three cash piles, not one

  Down payment, closing costs at 2-5% of price, and reserves after closing. On a $400,000 home at 10% down that is roughly $40,000 + $12,000 + $9,000, plus moving. Buyers who plan only the first number are the ones who close with nothing left for the first repair.

What this calculator does not cover

Every calculator simplifies, and the useful thing is knowing exactly where. These are the specific gaps between this estimate and your real situation:

• It applies the conventional 28/36 debt-to-income guideline. Automated underwriting frequently approves higher ratios with compensating factors, and being approved for more is not the same as it being affordable.
• The ratios use gross income, before tax. A household at the 36% limit on gross income may be committing well over 45% of take-home pay to debt.
• It does not count the expenses a lender ignores but a homeowner pays: maintenance at roughly 1% of home value a year, higher utilities than a rental, and the repair the inspection did not catch.
• Down payment and closing costs are separate piles of cash. Reaching the down payment target without reserves left over is the most common way a purchase goes wrong in the first year.

For anything that turns on an exact figure, use the primary sources below or a qualified professional. How these limits are decided and disclosed is described in the editorial standards.