How Much House Can I Afford

The How Much House Can I Afford calculator gives you an close idea of how much house you can afford to buy given your net(after tax) income, down payment savings, interest rate and loan term. 

This calculator bases your maximum monthly payment on the 25 percent rule which says that your total housing costs should not exceed 25% of your after-tax income. This is one of the most conservative methods to estimate affordability. Many people will use a larger amount but that can often put people in a tight spot where an expensive house payment can hurt other goals like saving for retirement, kid's college, home improvements, or anything else that you want to do with your money.  

Keep in mind that this calculator is only a ballpark amount but does not include other housing costs that will be included when you buy a house like homeowners insurance, property taxes, possibly PMI if you put down less than 20% of the homes value, HOA fees etc. Home maintenance should also be considered. This is not always included in the 25% number but do not forget to take into account the fact that all homes will have maintenance costs. When looking at a potential purchase be sure to think about what might need to be replaced or repaired soon. Is the roof old and in need of replacing soon? Are the HVAC and water heater nearing the end of their lives? These can all be expensive issues that could come up quickly. Be sure that when you buy a house you retain some money as an emergency fund to ease the blow of unexpected issues. 3 to 6 months of expenses is a good amount to keep as an emergency fund. Lenders will often want to see this as well. They want to know that you won't be completely broke when you write your down payment check for the house.