ECONOMY STUDIOHow much house can I afford?
The highest home price your income supports at this week's average 30-year mortgage rate, 7.18%, using Fannie Mae's debt-to-income limits.
- Monthly housing cost
- $2,500.00
- Principal and interest
- $2,055.48
- Loan amount
- $303,421
- Down payment share
- 20.9%
- Debt-to-income limit
- 36%
With $100,000 a year and $500 a month in other debts, a 36% debt-to-income limit leaves $2,500 a month for housing. At 7.18% over 30 years with $80,000 down, that buys a home of about $383,421.
At last year's average rate (6.22%), the same budget would have bought about $411,133: $27,712 more.
Every 1 point higher rate cuts the price you can afford by about $25,203.
Home price by debt-to-income limit
Your monthly budget
| Monthly | Amount |
|---|---|
| Principal and interest | $2,055.48 |
| Property tax | $319.52 |
| Home insurance | $125.00 |
| Housing, per month | $2,500.00 |
| Other debts | $500.00 |
| Share of gross income | 36.0% |
How it works
Your yearly income ÷ 12, times the debt-to-income limit, is the most all your monthly debts can add up to. The calculator takes away your other debts, insurance and HOA dues, and finds the home price whose loan payment and property tax use exactly what is left. The limits are Fannie Mae's: 36% for manually underwritten loans, up to 45% with strong credit and reserves, and 50% through its automated underwriting. A limit is the most a lender may allow, not a budget recommendation.
Then see the payment in detail with the mortgage calculator, and why rates matter: why borrowing is suddenly so expensive.
Questions
How much house can I afford?
It depends on your income, your other debts, your down payment and the mortgage rate. This calculator finds the highest price where the whole monthly housing cost (loan payment, property tax, insurance and HOA dues) plus your other debts stays within a debt-to-income limit, at this week's average rate of 7.18% (Freddie Mac).
What debt-to-income ratio do lenders allow?
Fannie Mae's Selling Guide sets a maximum total debt-to-income ratio of 36% of stable monthly income for manually underwritten loans, which can go up to 45% for borrowers who meet its credit score and reserve requirements, and 50% for loans underwritten through its automated system (Desktop Underwriter). Other loan types and lenders set their own limits.
What counts as debt?
Your new mortgage payment, including property tax and insurance, plus other long-term monthly payments such as car loans, student loans, credit card minimums and child support. Everyday costs like food and utilities are not part of the ratio.
Why does the mortgage rate matter so much?
A higher rate raises the payment on every dollar borrowed, so the same monthly budget supports a smaller loan. The calculator shows how much the price you can afford changes for every 1 point in the rate.
What isn't included?
Private mortgage insurance (PMI) when you put down less than 20%, closing costs, and the cash reserves some lenders require. Lenders also look at your credit score and income history.
Sources
- Fannie Mae Selling Guide, B3-6-02 Debt-to-Income Ratios
- Freddie Mac, Primary Mortgage Market Survey
- 30-year fixed rate (FRED MORTGAGE30US)
- CFPB, What is a debt-to-income ratio?
- CFPB, What is private mortgage insurance?
Educational tool, not financial advice. Results are estimates from the numbers you enter; lenders and banks calculate in their own ways. Default rates update automatically from official data.