How Much House Can I Afford?

How much house you can afford depends on your income, your other debts, how much cash you have and what the full monthly payment would be. This calculator works backward from common lending guidelines to a home price, including taxes, insurance, PMI and HOA dues.

What this calculator does

Enter your gross household income, monthly debt payments, cash for a down payment, mortgage rate, property tax rate, home insurance, HOA dues and the ratios you want to use. The calculator shows:

• the home price you can afford,
• the monthly housing payment at that price,
• the loan amount,
• which ratio limits you, and
• your housing and total debt ratios at that price.

The formula in plain English

Housing budget = the smaller of:

• gross monthly income × housing limit (28% by default), and
• gross monthly income × total debt limit (36% by default) − other monthly debt payments.

The calculator then searches for the highest home price whose full monthly payment fits that budget. The payment includes:

• principal and interest on a 30-year fixed loan,
• property tax,
• insurance,
• PMI, if your down payment is less than 20%, and
• HOA dues.

All of your cash goes toward the down payment.

A worked example

Dr. and Mr. Jackson earn $180,000 a year together. They have $900 a month in other debt payments and $60,000 for a down payment. Rates are about 6.4%, property tax is about 1%, and insurance is $2,400 a year.

• Housing limit: $180,000 ÷ 12 × 28% = $4,200 a month.
• Total debt limit: $15,000 × 36% − $900 = $4,500 a month.
• The housing limit is the tighter one.
• Affordable price: about $580,500.
• Monthly payment: about $4,200, on a loan of about $520,500.
• Total debt ratio: about 34%.

They could probably get approved for more, but this keeps room in their budget for retirement and childcare.

Why it matters at each career stage

If you're: Resident / fellow

Lenders may count your resident salary, or with some physician loans, your signed attending contract. Even if you can qualify, consider whether buying fits your plans after training.

If you're: Employed

In your first attending years, it's tempting to buy at the top of your approval. Many financial planners suggest staying closer to two to three times your gross income, especially while student loans are large.

If you're: Practice owner

If your income varies, use a conservative average. Lenders usually average two years of business income.

Making a confident choice

Use your real budget. Compare this payment with what you can afford while still saving for retirement and other goals.

Plan for maintenance. Set aside about 1% of the home's value each year.

Keep an emergency fund. Don't use every dollar of savings for the down payment.

Get pre-approved. A lender pre-approval shows exactly what you qualify for and strengthens offers.

Consider your timeline. Buying makes the most sense if you'll stay at least five years.

Other costs that come with buying

Closing costs, moving, furniture, window coverings and early repairs often add up to several percent of the purchase price in the first year. If you'll stretch your cash to make the down payment, consider a slightly lower price so you have money left for these costs and for emergencies. A house that leaves you with no savings can turn a small repair into real stress.

Adjusting the ratios

If you're comfortable with a higher ratio, raise the limits. If you want more room for savings, lower them. Try 25% housing and 33% total to see a more conservative price.

Next, see the full mortgage payment, compare a physician mortgage, decide whether to rent or buy, and read buying a home in healthcare.