How Much House Can I Really Afford
What you can actually afford, not what a lender will approve.
The 25/35 Rule
$
Income before taxes.
$
Car loans, student loans, credit card minimums, etc.
%
As a percentage of home price.
%
Annual rate.
years
In years.
%
Reasonable general default — check your actual local rate.
%
Reasonable general default — check your actual local rate.
%
Usually 0.1%–2% of the loan per year. Only applies under 20% down.
$
If applicable — otherwise leave at 0.
Your Results
Max PITI (Rule #1: 25% of income)—
Max PITI (Rule #2: 35% total debt limit)Total debt (including housing) can't exceed 35% of income.—
Your Actual Max PITIThe stricter of the two rules above — this is your real budget.—
Affordable Home Price
—
The most house your budget supports, given your down payment and rate assumptions.
Loan Amount—
Down Payment Amount—
Monthly Principal & Interest—
Monthly Property Tax—
Monthly Insurance—
Monthly PMIOnly charged when your down payment is under 20%.—
Check: Total PITIShould match your Actual Max PITI above.—
Your Monthly PITI Breakdown
Bonus: Price-to-Rent Ratio (Renting vs. Buying Your Home)
$
For deciding whether to rent or buy in a given market.
$
What a similar home would rent for in the same area.
Price-to-Rent Ratio—
What This Suggests
—
The Bands: Under 15 = buy · 15–20 = gray zone · 21–25 = lean renting · Over 25 = don't buy here
Bonus: The 1% Rule (For Rental Property Investments)
$
Include repairs needed to make it rent-ready. For evaluating a property as an investment, not your own home.
$
1% Threshold—
Rent as % of Price—
Passes the 1% Rule?A quick screen, not a full analysis — a pass doesn't guarantee a good deal.—
Gross Rent Multiplier (GRM)Years to recoup purchase price from rent. 100 months (8.33 years) or fewer is the reasonable-goal threshold, tied directly to the 1% Rule.—
Assumptions
Property tax and insurance are estimated as a % of price — check your actual local rates for accuracy.
Estimates for illustration only.
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