How To Use Our Home Affordability Calculator

To get started, enter information about your income, debt, down payment and loan type. Here’s a breakdown of each section:
  • Annual income:

    Enter your annual household income, before taxes and deductions. This is also called “gross income.” Don’t worry about how to calculate monthly income — the calculator will do the math.

  • Monthly debt:

    Add up all your monthly payments (including car loans, student loans and credit cards), and input the total.

  • Down payment:

    Most loan programs require a minimum down payment of between 3% and 3.5%. If you’re a veteran or active duty military service member, you might be eligible for zero down payment financing. If you’re not sure, type in how much money you’ve saved or think you could save for a down payment.

  • Loan type:

    A 30-year fixed mortgage term is used to calculate affordability and gives you a stable monthly payment. The low payment with a longer-term loan could help you afford a higher-priced home. You can switch to a 15-year fixed mortgage to pay your loan off faster, but the higher payment qualifies you for less house.

What the home affordability calculator tells you

LendingTree’s home affordability calculator provides more information than just house affordability. It details the effect homebuying might have on your take-home pay to help you make an informed decision that doesn’t squeeze your budget.

The estimated price you could afford. The recommended home price is based on a “conservative” estimate highlighted in green. If you want to get more aggressive, slide the toggle to the right into the red range. The home price goes up, but so does the debt-to-income ratio (DTI), which means you’re taking on more debt compared to your income.

The monthly payment. The mortgage payment figure includes an estimate of property taxes and homeowners insurance. You can enter tax and insurance information for a specific home in the “advanced options” to get more precise affordability feedback.

The debt-to-income ratio (DTI) used. The home affordability calculator is designed to suggest a conservative sales price you can afford. Financial planners recommend spending no more than 36% on total debt, including a mortgage payment, and no more than 28% on mortgage payments each month. This is known as the 28/36 rule. Some mortgage lenders can approve you with up to a 50% DTI, but studies show it may be harder to make the payments if hard financial times hit.

Monthly budget breakdown. One feature unique to LendingTree’s home affordability calculator is how much income is left over after subtracting your mortgage payment, debts and tax deductions from your paycheck. This is called “residual income,” and it’s a valuable number to determine whether a particular home fits into your overall budget.

When you get preapproved for a mortgage, lenders don’t review day-to-day expenses like daycare or school tuition, food, utilities, cell phone service or uncovered medical costs. The money that’s left over reflects how much you’ll have each month to cover all of your other monthly expenses.

And don’t forget about other costs of homeownership, like yard maintenance, floor upgrades, new paint or replacing an appliance. Consider budgeting at least 1% of the home’s purchase price annually toward maintenance and repairs. You’ll want to save even more for a larger home or one with older systems and appliances.

Tips for using the home affordability calculator

Many mortgage affordability calculators answer the question “how much mortgage can I qualify for on my salary?” That may result in purchasing the most expensive home you can finance, rather than one you can afford based on your overall financial picture. It’s also important to enter only the income a lender will use to approve the loan, so you don’t end up getting a home loan denial later. Follow the tips below to get the most accurate information for your circumstances:
  • Use an accurate income figure

    Make sure you use your income before tax deductions. Don’t include income from side hustles you’ve had for less than two years, and take a two-year average of your income after expenses if you’re self-employed.

  • Get a comparison rate quote for the “advanced options”

    The calculator’s interest rate can be changed. If current mortgage rates are lower, you may be able to buy a higher-priced new home.

  • Try making a larger down payment

    The more you put down, the lower your monthly payment will be. Also, make sure you also budget 2% to 6% of the home’s purchase price in closing costs, depending on your loan size.

  • Make sure your credit score is as high as possible

    The rate you’re quoted will depend on your credit score. The higher the score, the lower the interest rate will be, resulting in a more affordable monthly payment. Keep credit card balances below 30%, and pay everything on time to boost your credit scores.

  • Consider how much leftover income you need

    Before buying a home at the top of your budget, consider whether the extra money spent on a monthly housing payment would be better allocated elsewhere. Examples include saving up for college, extra retirement contributions or budgeting for a new vehicle for a growing family.

  • Make sure you’ve got some rainy day money

    Once you own a home, repairs and maintenance come out of your pocket. While it may not be required, conventional lenders encourage cash reserves of least two months worth of mortgage payments for these expenses.