Decision
Can I afford this house?
Affording a house is not one number. A lender decides with two ratios, your payment includes far more than the loan, and the cash you need at closing is larger than the down payment. Working through these four calculators in order gives you the real figure rather than the headline one.
How to think about it
The question people ask is “what price can I get approved for?”, and the question that decides whether the next ten years are comfortable is “what payment can I live with?”. Those are different numbers, and the second is almost always lower.
Lenders answer the first with two ratios. Total housing cost should stay under about 28% of gross income, and all debt payments together under about 36%, though conventional lending in practice stretches the second toward 43%. Whichever limit you reach first sets your ceiling — which is why clearing a car loan can raise your budget more than another year of saving.
Neither ratio sees what the house itself costs to own: maintenance, higher utilities than an apartment, and the furniture nobody budgets for. A payment that fits the ratios exactly can still leave no margin.
Work through these, in this order
- What price do the lender's ratios allow?Applies the 28/36 rule the way an underwriter does and tells you which of the two limits is binding for you. That is the more useful output: if the back-end ratio binds, the fix is debt, not saving.Open the Home Affordability Calculator
- What is my debt-to-income ratio right now?Lenders count payments, not balances — a $500 car payment counts as $500 whether $22,000 or $2,000 remains. At 6.5% over 30 years that same $500 supports roughly $79,100 of mortgage, so clearing a debt outright is usually worth more than halving two.Open the Debt-to-Income Ratio Calculator
- What is the real monthly payment on this specific house?Principal and interest is typically only about four-fifths of what leaves your account. Property tax, insurance and PMI make up the rest, and they are the part that surprises people at closing.Open the Mortgage Calculator
- How much cash do I need, and when?Twenty percent removes PMI but is not required; conventional loans start near 3%. Whatever you choose, the target is the down payment plus closing costs, not the down payment alone.Open the Down Payment Calculator
- What is due on the day itself?Typically 2–5% of the price, in cash, on top of everything above. Reaching your savings goal and then discovering you are $12,000 short of being able to close is a common and avoidable failure.Open the Closing Cost Calculator
What the numbers together tell you
Read the four numbers together: the price the ratios allow, the payment that price produces, the cash needed to reach it, and what is left over each month afterwards. A house is affordable when all four are comfortable, not when the first one is.
One practical test before committing: work out the payment at your maximum price, then live for three months on the difference between it and your current rent, moving the gap into savings. If that feels tight before you own anything, your real ceiling is lower than the lender's.
These are estimates based on the assumptions you enter. Your actual rate, taxes and insurance depend on your credit profile, your location and the specific property.
Read more about this
How Much House Can You Afford? The 28/36 Rule Explained
Lenders decide how much house you can afford with two ratios: housing costs under 28% of income, and total debt under 36%. Here is how the 28/36 rule works, why your down payment matters twice, and how to find your real budget.
How to Save for a Down Payment on a House
You don't always need 20% down — but you do need a plan. Here's how much a down payment (and closing costs) really takes, where to keep the money, and how to reach the number faster.
What Is a Good Debt-to-Income Ratio?
Your debt-to-income ratio is the number lenders weigh most for a mortgage: total monthly debt divided by gross income. Here's what counts, what's considered a good DTI, and how to lower yours before you apply.
Frequently asked questions
What income do I need for a $400,000 house?
At roughly 6.5% with 20% down and typical taxes and insurance, a $400,000 home runs about $2,570 a month, which the 28% rule supports at around $110,000 of gross annual income with little other debt. Existing debt payments lower that considerably.
Should I put down 20%?
It removes PMI and earns the best pricing, but it is a threshold rather than a requirement. PMI is temporary — cancellable at 80% of the original value and removed automatically at 78% — so paying it for a few years to buy several years earlier is a defensible trade rather than a penalty.
Does the lender's maximum mean I can afford it?
No. Approval measures the risk to the lender, not the comfort of your budget. A payment at 43% of gross income is serviceable on paper and leaves very little room for a job change, a new child, or a bad year.
Related decisions
Should I rent or buy?
Compare the full cost of owning against renting over your actual time horizon, including the costs of buying and selling that make short stays expensive.
Should I refinance my mortgage?
The break-even test everyone teaches can approve a refinance that costs you more than doing nothing. Here is the comparison that actually decides it.
How do I get out of debt?
Order your debts, find the extra payment that actually moves the date, and price the shortcuts. The method matters far less than most advice suggests.
Disclaimer: DayCents provides this calculator for educational purposes only. Results are estimates based on your inputs and the stated assumptions — they are not financial advice, a quote, or an offer of credit. Consult a qualified financial professional before making major money decisions.