Home Affordability Calculator

How to use this calculator

Enter gross annual household income, your existing monthly debt payments (everything except housing), the cash you have set aside for the down payment, and the mortgage rate you expect to qualify for. Pick a stance: Conservative (25/33) leaves the most monthly buffer, Standard (28/36) matches the traditional bank underwriting rule, and Stretch (32/40) approximates the absolute ceiling some lenders will approve. The calculator returns your maximum home price, the full monthly housing cost behind it, your down payment percentage, and the 30-year interest total.

The math assumes a 30-year fixed mortgage (the most common residential term in the US; Canadian buyers typically renew a 5-year term inside a 25- or 30-year amortization, and the monthly math at the same rate is close enough for planning).

How the 28/36 rule math works

The calculator runs the same sequence a loan officer runs, in order:

• 1. Housing cap from the front ratio. Gross monthly income times 28% (or 25% Conservative, 32% Stretch). On $80,000/year that is $6,667 x 0.28 = $1,867/month for everything housing: principal, interest, tax, insurance, and PMI.
• 2. Housing cap from the back ratio. Gross monthly income times 36% (or 33% / 40%), minus your existing monthly debts. $6,667 x 0.36 = $2,400, minus $400 of debts = $2,000. The calculator takes the LOWER of the two caps; whichever rule binds is your real limit.
• 3. Subtract the ownership costs that are not the mortgage. Property tax (working estimate 1.0% of home value per year), homeowners insurance (0.35% per year), and PMI (0.6% of the loan per year) when the down payment is under 20%. What remains is the maximum principal-and-interest payment.
• 4. Back-solve the loan. At 6.75% over 30 years, each $1,000 borrowed costs about $6.49/month, so max loan = max P&I divided by the payment factor. Add your down payment to get the maximum price.
• 5. Iterate. Property tax, insurance, and PMI all scale with the price, and the price depends on them, so the calculator loops the sequence until the number stops moving (it converges in a few passes). That is why the answer is a few thousand dollars different from a one-pass pencil estimate.

US vs Canada: what changes under 20% down

The single most important cross-border difference in home buying is how mortgage insurance works when your down payment is under 20%:

• US: PMI is a monthly bill that eventually goes away. Conventional loans under 20% down carry private mortgage insurance at roughly 0.5 to 1.5% of the loan per year (about $150 to $450/month on a $300,000 loan), billed monthly until you reach about 20% equity, at which point it can be removed. FHA loans charge MIP at about 0.85%/year plus an upfront premium, and in most cases MIP lasts the life of the loan.
• Canada: CMHC is added to the loan and never billed monthly. Mortgage default insurance is mandatory under 20% down: 4.0% of the loan if your down payment is 5 to 9.99%, 3.1% if 10 to 14.99%, 2.8% if 15 to 19.99%. The premium is rolled into the principal, so you borrow more, pay interest on the premium for the whole amortization, and the monthly payment rises proportionally. There is no separate insurance line to cancel later.
• Canadian legal minimum down payments. 5% on homes under $500,000; 5% on the first $500,000 plus 10% on the portion above for homes between $500,000 and $1.5 million; 20% required at $1.5 million and up. The calculator flags your result if the down payment entered would not meet the minimum at the computed price.
• Rate shopping sources. US: Bankrate, NerdWallet, and the mortgage-broker network. Canada: Ratehub, RateSpy, and Wowa. Posted bank rates in Canada are negotiable; broker rates routinely beat them.

What this calculator does not include

• Closing costs. US: 2 to 5% of the purchase price (loan origination, title insurance, escrow, transfer and recording fees, prepaids). Canada: 1.5 to 4% plus provincial land-transfer tax in Ontario (0.5 to 2.5% sliding), BC (1 to 3%), and Quebec (0.5 to 1.5%); first-time buyers get rebates in Ontario (up to $4,000, Toronto adds a municipal rebate) and BC (up to $8,000). This is cash on top of the down payment.
• Cash reserves. Keep 3 to 6 months of the full monthly housing cost in savings after closing, separate from your emergency fund. A reserve is also what lets you decline PMI-priced anxiety when the furnace dies in year one.
• Maintenance. Budget about 1% of home value per year for upkeep. A $300,000 home costs roughly $3,000/year in routine maintenance and staged repairs (roof, HVAC, water heater) over its life.
• Rate movement. The default 6.75% is a 2026 conventional 30-year estimate. Rates change weekly; a half-point swing moves the maximum price by roughly 5%. Get a current pre-approval before treating any number here as real.

Common mistakes

• Maxing out the bank's pre-approval. Banks approve to the 36% ceiling (sometimes past it). Living at 25 to 28% instead is the difference between owning a home and being owned by one. The Conservative stance here exists for exactly this reason.
• Forgetting closing costs. Budgeting every saved dollar to the down payment and discovering at offer time that you need another 2 to 5% (US) or 1.5 to 4% plus land-transfer tax (Canada) in cash.
• Treating the payment as the whole cost. Property tax, insurance, maintenance (about 1%/year), and utilities that run higher than a rental add hundreds per month beyond the mortgage line.
• Ignoring the PMI/CMHC math at 15 to 19% down. If you are within a few thousand dollars of 20%, getting there removes US PMI entirely and drops the Canadian CMHC premium tier. Few savings goals have a better guaranteed return.
• Opening new credit during the process. A new car loan or furniture financing between pre-approval and closing changes your DTI and can kill the loan days before the keys.

FAQ