Home Affordability Calculator
Determine your maximum home purchase price
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How to Compare Loans: Rate, Term, and Total Cost
Rate vs Term Tradeoff
A lower rate saves money on every payment. A shorter term reduces the number of payments and total interest. Example: a $250,000 loan at 6.5% for 30 years costs $539,598 in total interest. The same amount at 5.8% for 15 years costs $120,448. That is $419,150 less in total cost — but the monthly payment is higher ($2,096 vs $1,581).
The right choice depends on your cash flow and goals. A shorter term builds equity faster and saves massively on interest, but a longer term provides lower monthly payments and more flexibility.
Always Compare APR, Not Just Interest Rate
The APR (Annual Percentage Rate) includes the interest rate plus points, origination fees, and other closing costs. Two loans with the same interest rate can have very different APRs. A loan with 1 point (1% of loan amount upfront) has a higher APR than a no-fee loan with the same rate. Always compare APRs for a complete picture of borrowing cost.
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Explore related tools: Mortgage Calculator · Loan Comparison Calculator · Home Affordability Calculator · Debt-to-Income Calculator
Written by Finance Experts · Last updated September 2026
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Frequently Asked Questions
How much house can I afford?
Lenders typically approve up to 28% of gross monthly income for housing costs (front-end DTI) and 36% total (back-end DTI). On a $100,000 salary, that means roughly $2,333/month for housing. Use our affordability calculator for a personalized estimate.
What is the 28/36 rule?
The 28/36 rule states that your housing costs should not exceed 28% of gross monthly income, and total debt payments should not exceed 36%. This is a guideline used by lenders to determine how much you can borrow safely.
Should I save for a larger down payment?
A 20% down payment eliminates PMI (saving $100-$300/month) and may qualify you for better rates. Even going from 5% to 10% down can save 0.25% on your rate. However, waiting too long to save means missing potential home appreciation.
What credit score do I need to buy a house?
Conventional loans require 620+ (740+ for best rates). FHA loans accept 580+ with 3.5% down. VA loans have no official minimum but most lenders want 620+. Higher scores save you money — a 20-point improvement can lower your rate by 0.25%.
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Current Mortgage Rates
Rates updated daily via Bankrate.com
How This Calculator Works
Real-World Example: Buying a $400,000 Home
Scenario: Sarah buys a $400,000 home with 10% down ($40,000), a 30-year fixed at 6.5%.
- Loan amount: $360,000
- Monthly P&I: $2,275
- PMI (0.7%): $210/month
- Property tax (1.1%): $367/month
- Insurance: $150/month
- Total monthly: $3,002
- Total interest over 30 years: $419,131
- Total cost (including down payment): $459,131
Historical Mortgage Rates (1971-2026)
Source: Freddie Mac Primary Mortgage Market Survey
When to Use This Calculator
- Refinancing decisions: Calculate your break-even point
How Mortgage Payments Are Calculated
- Insurance: Homeowners insurance, also escrowed monthly
Fixed-Rate vs Adjustable-Rate Mortgage (ARM)
Closing Costs: What to Expect
Private Mortgage Insurance (PMI) Explained
Real-World Example: $400,000 Home Purchase
Scenario: Buying a $400,000 home with 10% down ($40,000) at 6.5% for 30 years in Texas.
- Loan amount: $360,000
- Principal & Interest: $2,275/mo
- Property tax (1.8%): $600/mo
- Homeowners insurance: $175/mo
- PMI (0.6%): $180/mo
- Total monthly payment: $3,230
- Down payment: $40,000
- Closing costs (3%): $12,000
- Total cash needed at closing: $52,000
Over 30 years, total interest paid: $459,000. Total cost of the home: $859,000. That is more than double the purchase price.
When Refinancing Makes Sense
- Cash-out refinance: Access equity for home improvements (often tax-deductible)
Data Sources & Citations
- OfficialInternal Revenue Service (IRS)
Disclaimer: Calculators and tools on this site are for informational purposes only and do not constitute financial, tax, legal, medical, or investment advice. Results are estimates and may not reflect actual rates or terms. Consult a qualified professional before making decisions. Privacy Policy
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