For a detailed explanation of how the calculator works, return to the page listed above.

Some of the main factors to consider when estimating home affordability are your monthly income, down payment and closing costs, monthly expenses, your credit score and amount of debt you owe, other savings goals, housing market, income stability, and ease of mobility.

This calculator does NOT consider all these factors. Like most online mortgage affordability calculators, it is based mostly on your income, debt-to-income ratio, available funds, and estimates of common housing expenses.

Warning: People commonly use calculators like this to purchase the largest house they can, but that is often a big mistake. This calculator should only be used for educational purposes and definitely NOT as financial advice.

A note about worksheet protection: The Affordability worksheet is protected to help you avoid accidentally entering a value over the top of a formula. You can go to Review > Unprotect Sheet if you feel confident that the changes you will make won't mess stuff up.

If your annual income is complicated, you can look at your previous tax return and enter your adjusted gross income as your income. This may not be exactly what your lender uses.

Many lenders use the 28/36 rule to determine a couple maximums. The first is that the maximum housing payment cannot be greater than 28% of your monthly income. The second is that the debt-to-income ratio cannot be greater than 36%.

The debt-to-income ratio is calculated as Total Monthly Debt / Gross Monthly Income.

Enter the monthly property tax. You may need to iterate on this value, because the tax depends on the home value. You can look up the property tax payments for specific homes online.

Homeowner's insurance also depends on the home price, so make sure to adjust this value after you calculate the home price.

Private mortgage insurance is usually required if the down payments is less than 20%, and the cost may be about 0.5% to 1% of the loan amount per year.

HOA fees are usually a set monthly payment and they vary depending on the neighborhood.

Include estimates of the monthly costs associated with home ownership, such as utilities, repairs, maintenance, etc.

When buying a property, you need funds to cover both the closing costs as well as the down payment.

Closing costs can vary a lot, so find out what the costs will be from your real estate agent. Some closing costs my be fixed, while other closing costs are calculated as a percentage of the home price. If you know these values, you can enter them.

If you choose to set the minimum down payment to less than 20%, you will likely have to pay PMI. This calculator doesn't handle the case where you get a secondary loan instead of making a down payment. In that case the interest rate for the secondary loan would be higher, so if you want a really rough estimate, you could try setting the minimum down payment % to zero and entering an interest rate somewhere between the rates for the primary and secondary loans.

When referring to a mortgage payment, PITI stands for Principal + Interest + Taxes + Insurance and PI is therefore just the Principal + Interest portion. That is important because the Loan Amount is calculated only from the PI portion. The institution that services your mortgage will hold the tax and insurance portion of your payment in escrow and pay these bills for you.