House Affordability Calculator: Compare Conventional, FHA & VA Loans
Find out how much house you can afford by loan type, with PMI, closing costs, HOA, and a built-in stress test.
How Loan Type Changes What You Can Afford
Conventional Loans (28/36 Rule)
- DTI Limits:28% front-end, 36% back-end
- PMI:Required when the down payment is below 20% of the home price (typically 0.5% of the loan per year). Removed once you reach 20% equity.
- Best For:Buyers with at least 5% down and solid credit who want to avoid long-term mortgage insurance
- Example:On $100K income with $500/month debt, the conventional ceiling is roughly $360K depending on rate and taxes
The conventional 28/36 standard is the most widely used guideline for mortgage affordability. It limits housing costs to 28% of gross income (front-end) and total debt to 36% (back-end).
FHA Loans (31/43 Rule)
- DTI Limits:31% front-end, 43% back-end
- Upfront MIP:1.75% of the loan amount, financed into the loan (adds to your balance)
- Annual MIP:0.55% of the loan per year, added to your monthly payment. Does not drop off for loans with less than 10% down.
- Best For:First-time buyers, lower credit scores, or buyers with limited savings for a down payment (minimum 3.5% down)
FHA loans allow higher DTI ratios, which means you may qualify for a more expensive home. The tradeoff is mandatory mortgage insurance that lasts the life of the loan for most borrowers.
VA Loans (41% Back-End Only)
- DTI Limit:41% back-end only. No front-end limit.
- Funding Fee:2.15% for first-time use (0% down), reduced with larger down payments. Subsequent use: 3.3%. Waived for veterans with service-connected disabilities.
- No Monthly Insurance:Unlike conventional PMI or FHA MIP, VA loans carry no monthly insurance premium
- Best For:Eligible veterans and active-duty service members, especially those with limited savings for a down payment
VA loans have no front-end DTI limit at all and no monthly mortgage insurance, making them the most flexible option for eligible veterans and service members.
Understanding the 28/36 Underwriting Standard
The Front-End Limit
- Calculation:
- What Counts:Principal, interest, property taxes, homeowners insurance, HOA fees, and any mortgage insurance (PMI or MIP)
- Example:At $100,000/year ($8,333/month), the conventional front-end limit is $2,333/month for housing
The front-end DTI ratio caps your total housing payment at a percentage of your gross monthly income. For conventional loans, that's 28%. For FHA, it's 31%. VA loans have no front-end cap.
This is often the binding constraint for higher-income earners with little other debt.
The Back-End Limit
- Calculation:
- What Counts:Housing payment + car loans + student loans + credit card minimums + any other recurring debt
- Example:At $100,000/year with $500/month in debts, the conventional back-end limit for housing is $2,500/month ($3,000 - $500)
The back-end DTI ratio caps your total monthly debt load (housing plus everything else) at a percentage of gross income, minus your existing debts.
This is usually the binding constraint for buyers carrying car loans, student debt, or credit card balances.
The Affordability Ceiling
- Bottleneck Identified:The results tell you whether income or debt is the limiting factor, so you know where to focus
- Closing Costs:Shown separately as additional cash needed at closing (default 3%), not deducted from your down payment
- PMI/MIP Included:Mortgage insurance is factored into the affordability equation, so the home price already accounts for that extra monthly cost
- Down Payment Impact:A larger down payment reduces the loan (and potentially eliminates PMI), letting you qualify for a higher-priced home
The calculator takes the lower of the front-end and back-end limits, then works backward to find the highest home price that fits within that budget after taxes, insurance, HOA, and any mortgage insurance.
Stress Test and Rate Sensitivity
Stress Test (+2% Rate Increase)
- Why It Matters:Rates can move between pre-approval and closing. A stress test shows whether a rate spike would push you over the edge.
- Typical Impact:A 2% increase can cut your affordable home price by $75,000 to $100,000
- Example:At 6.8%, you might afford $380K. At 8.8%, that could drop to $310K or less
The built-in stress test recalculates your affordability assuming rates jump 2 percentage points above your current input. This is a straightforward way to check whether your budget has any margin.
Some lenders and many financial advisors recommend stress testing as a standard part of the home search.
Rate Sensitivity
- Monthly Impact:A 1% rate increase adds roughly $50-70/month for every $100K borrowed
- Affordability Impact:That same 1% can reduce your affordable home price by $30,000-$50,000
- Total Cost:Over 30 years, a 1% rate difference can add $30,000-$50,000 in interest payments
Small changes in interest rates have an outsized effect on both your monthly payment and the total you'll pay over the life of the loan.
Hidden Costs That Affect Your Real Budget
Taxes, Insurance, and HOA
- Property Taxes:Typically 1-2% of home value per year. In high-tax states (Texas, New Jersey, Illinois), it can reach 2-3%.
- Homeowners Insurance:Usually $1,200-$2,400/year. In coastal or wildfire-prone areas, premiums can be $3,000 or higher.
- HOA Fees:Anywhere from $0 to $500+/month. This is factored into the affordability calculation if you enter an amount.
- Why It Matters:High taxes or insurance can knock $50,000 or more off your affordable home price without any change to your income or debt
These costs are included in your DTI calculation but are easy to underestimate. Together, they can consume 15-25% or more of your total monthly housing payment.
The calculator shows the exact first-month breakdown: principal, interest, taxes, insurance, HOA, and mortgage insurance.
Maintenance and Repairs
- Default:The calculator uses 1.5% annually (adjustable). On a $400K home, that's $6,000/year or $500/month.
- What It Covers:Roof repairs, HVAC replacement, plumbing, appliances, painting, and landscaping. Some years you spend nothing. Some years you spend a lot.
- Not in the DTI:Maintenance is shown as informational in the results. It's not part of the DTI calculation, but it's real money that has to come from somewhere.
Lenders don't account for maintenance in their approval, but your budget needs to. The standard guideline is 1-1.5% of the home's value per year.
House Affordability Calculator FAQ
What is the 28/36 rule and how does it compare to FHA and VA limits?
The 28/36 rule is the conventional underwriting standard. The 28% front-end ratio caps your housing costs (principal, interest, taxes, insurance, HOA, and PMI) at 28% of gross monthly income. The 36% back-end ratio caps all debt payments at 36%. FHA loans are more lenient at 31/43, which means you can qualify for a larger loan, but you'll pay mortgage insurance (MIP) for the life of the loan. VA loans have no front-end limit and a 41% back-end cap, with no monthly insurance at all. This calculator lets you compare all three side by side so you can see the real tradeoffs.
How do my current debts reduce my home-buying power?
Every dollar of monthly debt eats directly into your back-end DTI limit. If you earn $8,333/month gross, your conventional back-end limit is $3,000 (36%). With $500/month in car and student loan payments, only $2,500 remains for housing. That can knock $50,000 to $100,000 or more off your affordable home price. The calculator shows the exact dollar impact under "What's Limiting Your Buying Power?" so you can decide whether paying down debt is worth more than saving for a bigger down payment.
What is PMI, and how is it different from FHA MIP and VA funding fees?
Conventional PMI kicks in when your down payment is less than 20% of the home price. It typically costs about 0.5% of the loan amount per year and goes away once you reach 20% equity. FHA MIP has two parts: a 1.75% upfront premium (financed into your loan) plus a 0.55% annual premium that stays for the life of the loan if you put down less than 10%. VA loans charge no monthly insurance, but there's a one-time funding fee (2.15% for first-time users, less with a larger down payment). Veterans with a service-connected disability are exempt from the fee entirely. The calculator factors all of these into the affordability math automatically.
What happens to my affordability if interest rates rise by 2%?
A 2% rate jump can reduce your buying power by $75,000 to $100,000. On a $400,000 loan at 6.8%, your monthly P&I is about $2,606. At 8.8%, it jumps to roughly $3,155, an extra $549 a month. The calculator includes a Stress Test toggle that recalculates everything at +2% so you can see whether your budget holds up if rates move before you close.
What costs does the calculator include beyond the mortgage payment?
The calculator accounts for property taxes, homeowners insurance, HOA fees, PMI or MIP (depending on loan type), and closing costs (typically 2-5% of the home price). It also estimates monthly maintenance at a rate you can adjust (default 1.5% of home value per year). The results show your total cash needed at closing (down payment plus closing costs plus any financed upfront fees) so there are no surprises when you sit down at the table.
Why does the bank say I can afford more than this calculator shows?
Banks approve loans based on DTI limits as high as 43-50%. They're answering one question: will this borrower repay? They don't factor in your grocery bill, daycare costs, how often the furnace breaks, or whether you still want to take a vacation. This calculator uses the 28/36 standard by default, which leaves room for the rest of your life. You can switch to FHA (31/43) or even see the aggressive end of the scale, but the goal is to show you a number you can actually live with.