# Calculate your mortgage affordability: a complete guide By Opendoor Editorial Team | 2025-11-28 > Calculate your mortgage affordability: a complete guide ## **What is mortgage affordability? ** Simply speaking, mortgage affordability is the verification of a homebuyer’s financial capability of repaying a mortgage monthly. In other words, it’s the maximum amount the applicant is able to borrow, based on several factors, such as income and financial profile. Understanding your mortgage affordability is necessary to ensure you borrow the amount that is responsible, based on your unique financial status.  ## **The 28/36 rule for mortgage qualification** In order to quickly determine mortgage affordability, lenders often use the 28/36 rule. Adhering to the rule can improve your likelihood of loan application approval. It states that a maximum of 28% of your gross monthly income should be spent on total housing expenses, such as mortgage (principal and interest), property taxes (annual taxes divided by 12), insurance, and HOA fees; whereas at most 36% goes to total debt payments. **Example: Let’s say your monthly income is $8,000. Your housing payment shouldn’t exceed 28% of this amount – $2,240. ** [See Homes Near You](#) ## **Key factors that determine your mortgage affordability** When searching for a new home, checking your mortgage affordability is a crucial first step. There are several elements that determine the maximum purchase price that you can qualify for. ### **Income and employment stability** Annual income is your gross income before tax. It includes any bonuses and supplementary income such as income from your pension or investments, as well as earnings from overtime, commission payments, or a second job. Lenders evaluate your employment history and documentation (pay stubs, tax returns, W-2s, 1099s).     ### **Debt-to-income ratio calculation** To calculate the DTI ratio, sum up all your monthly debt payments and divide the sum by your gross monthly income. Multiply it by 100 to express it as a percentage. You can easily use the mortgage qualification calculator to see your ratios.  ### **Credit score and history impact** Checking your credit score is an important step before applying for a mortgage. If your credit score is high, you qualify for better interest rates, and the lower rates increase the amount you can afford to buy your dream house. How to improve your credit score? Make sure you pay all your bills on time and try to reduce your debt. ### **Down payment considerations** A down payment is the amount you pay to obtain a mortgage. The larger your down payment, the lower the interest rates. Larger down payments can also help you eliminate PMI (Private Mortgage Insurance). Do you want to see the impact of down payment changes? Use our What home can I afford? and Home price calculator tools! ### **Current mortgage interest rates** While determining your mortgage affordability, do not forget to analyze current mortgage interest rates. Compare them to historical averages and be aware that even small changes can significantly affect your monthly payments. Use the mortgage approval calculator and How much can I afford tools to compare the rates. ## **How to calculate your maximum mortgage amount** In order to precisely calculate your maximum mortgage affordability, follow the steps described below. ### **Determine your gross monthly income** The fundamental step in calculating your affordability is accurately determining your gross monthly income. Your gross monthly income is the total amount of money you earn before taxes and deductions are taken out. To calculate it, add your salary and wages, reliable bonuses and commissions, investment income, and other regular income sources. To make it automatically and accurately, use our house loan calculator for income.  ### **Calculate your monthly debt payments ** Time to figure out your total monthly debt obligations. Sum up your credit card payments, student loans, car loans, personal loans, and child support or alimony. This amount directly impacts how much you can borrow to safely afford a house.  ### **Apply the affordability formulas** Use the industry-standard 28/36 rule to set your maximum borrowing capacity. Your monthly budget is your gross monthly income x 28%, and your maximum total debt is your gross monthly income x 36%. The most responsible estimate for your potential mortgage affordability will be the lower of these figures. Do not forget to adjust it for property taxes and insurance. Need help in estimating your mortgage capability? Use the online affordability mortgage calculator! ### **Factor in additional homeownership costs** Keep in mind that your affordability is much more than your monthly mortgage payment. You should also proactively budget for costs such as maintenance and unexpected repairs, utilities, potential home improvement projects, and mandatory Homeowners Association fees if applicable. Use a housing affordability calculator to make it quickly. ## **Mortgage affordability calculator: how to use it effectively ** Online affordability calculators are a powerful yet simple way to quickly calculate your mortgage affordability. The key advantages of a mortgage affordability calculator: - Speed and efficiency – you immediately get all the information on the amount you can borrow. - Accuracy – unlike manual calculations, online calculators account for all necessary variables simultaneously. - Scenario testing – you can test and compare down payments and interest rates. - Strategic planning – an online mortgage affordability calculator helps you pinpoint areas that can improve your long-term affordability. To make sure you make the most out of the home affordability calculator, prepare to use the tool. Gather all necessary information, such as detailed income figures, debt payments, estimated property taxes, and the exact down payment amount. [Get Your Mortgage Estimate](#) ## **Comparing different loan types and their affordability impact** There are several types of loans. Each of them affects the affordability calculation results. ### **Conventional loans** These are not government-backed. They are issued by private lenders. Such loans require 3-20% down payments and a credit score over 620 (680+ for best terms). The key benefit is that conventional loans are flexible to use, and the PMI drops at 20% equity. On the other hand, they require higher credit. See the online affordability calculator for more information. ### **FHA loans ** FHA loans are insured by the Federal Housing Administration. They allow credit scores as low as 500 and offer higher down-payment flexibility. The down payment is as low as 3.5%. FHA loans are great for first-time buyers. The downside is that the Mortgage Insurance Premium is required. Also, there are loan limits.  ### **VA loans** VA loans are backed by the Department of Veterans Affairs. They are only available to veterans, active-duty military, and qualifying spouses. There is no down payment required, nor the PMI. The interest rates are 0.5-1% below market. However, some funding fees may apply. Use our How much you can afford calculator for more information on VA loans.  ### **USDA loans   ** USDA loans are issued by the US Department of Agriculture. They are available for rural and some urban buyers. USDA loans offer zero down payment for eligible properties; however, there are location and income restrictions. [See Homes Near You](#) ## **Strategies to increase your mortgage affordability** There are certain actions you can take to increase your mortgage affordability.    ### **Improve your credit score** Increase your income and pay down revolving debt. Try to avoid new credit applications and make all payments on time. This will increase the amount you can afford. ### **Reduce existing debt ** Paying off existing unsecured debts will lower your debt-to-income ratio. This will make you more attractive to lenders and, in consequence, increase your mortgage affordability. You can also consider debt consolidation.  ### **Increase your down payment   ** Make sure you save money wherever possible. The more you can pay in as a deposit, the less you need to borrow from the lender. Try to cut unnecessary expenditure to free up more income for your mortgage. Use gift funds from family if available. ### **Explore first-time homebuyer programs** Usually, there are many programs you can explore to increase how much you can afford. Browse state and local assistance and check for profession-based incentives. There may also be some down payment assistance grants you can apply for. ## **Moving forward with your home purchase** Once your mortgage affordability is set, time to smoothly move to the purchase. Get pre-approved to confirm your budget. Find professional real estate agents and loan officers to manage all lending and closing procedures. **Opendoor** can simplify the entire journey from search to close. Also, if you’re selling the house, at** Opendoor**, we’ll help you avoid carrying two mortgages at once. ## **Frequently asked questions about mortgage affordability** ### **How much mortgage can I afford with a $100,000 annual income? ** Based on the 28/36 rule, you can afford a total mortgage of approximately $350,000. This will account for a monthly payment of about $2,333.  ### **What salary do I need to afford a $500,000 mortgage?** You will typically require a minimum gross annual income of approximately $140,000-$150,000.  ### **How does my credit score affect how much I can afford?** A higher credit score qualifies you for lower interest rates. This reduces your monthly payments and, at the same time, increases the total loan amount you can borrow. ### **Can I afford a mortgage if I’m self-employed?** Yes, but in most cases, lenders need at least two stable self-employment incomes. The income should be validated by full documentation.  ### **Should I max out my mortgage affordability when buying a home?** No. It is recommended to maintain financial breathing room. Experts advise always borrowing less than one’s maximum capacity so that you can smoothly manage unexpected costs and save for the future.  | **City** | **Explore Opendoor guides to neighborhoods in your area** | | Raleigh | [Historic Oakwood](https://www.opendoor.com/neighborhood-guide/historic-oakwood-raleigh), [Downtown](https://www.opendoor.com/neighborhood-guide/downtown-raleigh), [Boylan Heights](https://www.opendoor.com/neighborhood-guide/boylan-heights-raleigh), [Cameron Village](https://www.opendoor.com/neighborhood-guide/cameron-village-raleigh), [Five Points](https://www.opendoor.com/neighborhood-guide/five-points-raleigh), [North Hills](https://www.opendoor.com/neighborhood-guide/north-hills-raleigh), [Stonehenge](https://www.opendoor.com/neighborhood-guide/stonehenge-raleigh), [Wakefield](https://www.opendoor.com/neighborhood-guide/wakefield-raleigh), [Brier Creek](https://www.opendoor.com/neighborhood-guide/brier-creek-raleigh) | | Charlotte | [Uptown](https://www.opendoor.com/neighborhood-guide/uptown-charlotte), [Dilworth](https://www.opendoor.com/neighborhood-guide/dilworth-charlotte), [South End](https://www.opendoor.com/neighborhood-guide/south-end-charlotte), [Elizabeth](https://www.opendoor.com/neighborhood-guide/elizabeth-charlotte), [Belmont](https://www.opendoor.com/neighborhood-guide/belmont-charlotte), [Plaza Midwood](https://www.opendoor.com/neighborhood-guide/plaza-midwood-charlotte), [NoDa](https://www.opendoor.com/neighborhood-guide/noda-charlotte), [Camp North End](https://www.opendoor.com/neighborhood-guide/camp-north-end-charlotte), [Eastover](https://www.opendoor.com/neighborhood-guide/eastover-charlotte), [Myers Park](https://www.opendoor.com/neighborhood-guide/myers-park-charlotte), [Providence Plantation](https://www.opendoor.com/neighborhood-guide/providence-plantation-charlotte), [Ballantyne](https://www.opendoor.com/neighborhood-guide/ballantyne-charlotte) | | Plano | [Whiffletree](https://www.opendoor.com/neighborhood-guide/whiffletree-plano), [Legacy West](https://www.opendoor.com/neighborhood-guide/legacy-west-plano), [Kings Ridge](https://www.opendoor.com/neighborhood-guide/kings-ridge-plano), [Deerfield](https://www.opendoor.com/neighborhood-guide/deerfield-plano), [Shoal Creek](https://www.opendoor.com/neighborhood-guide/shoal-creek-plano), [Ridgeview Ranch](https://www.opendoor.com/neighborhood-guide/ridgeview-ranch-plano), [Willow Bend](https://www.opendoor.com/neighborhood-guide/willow-bend-plano), [West Plano](https://www.opendoor.com/neighborhood-guide/west-plano-plano), [Lakeside on Preston](https://www.opendoor.com/neighborhood-guide/lakeside-on-preston-plano), [Avignon Windhaven](https://www.opendoor.com/neighborhood-guide/avignon-windhaven-plano) | | Dallas | [Uptown](https://www.opendoor.com/neighborhood-guide/uptown-dallas), [Highland Park](https://www.opendoor.com/neighborhood-guide/highland-park-dallas), [Knox-Henderson](https://www.opendoor.com/neighborhood-guide/knox-henderson-dallas), [Lower Greenville](https://www.opendoor.com/neighborhood-guide/lower-greenville-dallas), [Bishop Arts District](https://www.opendoor.com/neighborhood-guide/bishop-arts-district-dallas), [Lakewood](https://www.opendoor.com/neighborhood-guide/lakewood-dallas), [Oak Lawn](https://www.opendoor.com/neighborhood-guide/oak-lawn-dallas), [Victory Park](https://www.opendoor.com/neighborhood-guide/victory-park-dallas), [Deep Ellum](https://www.opendoor.com/neighborhood-guide/deep-ellum-dallas), [Preston Hollow](https://www.opendoor.com/neighborhood-guide/preston-hollow-dallas) | | Fort Worth | [Downtown](https://www.opendoor.com/neighborhood-guide/downtown-fort-worth), [West 7th/Cultural District](https://www.opendoor.com/neighborhood-guide/west-7th-cultural-district-fort-worth), [Arlington Heights](https://www.opendoor.com/neighborhood-guide/arlington-heights-fort-worth), [Rivercrest](https://www.opendoor.com/neighborhood-guide/rivercrest-fort-worth), [TCU/University](https://www.opendoor.com/neighborhood-guide/tcu-university-fort-worth), [Fairmount](https://www.opendoor.com/neighborhood-guide/fairmount-fort-worth), [Ridglea Hills](https://www.opendoor.com/neighborhood-guide/ridglea-hills-fort-worth), [Benbrook](https://www.opendoor.com/neighborhood-guide/benbrook-fort-worth), [North Richland Hills](https://www.opendoor.com/neighborhood-guide/north-richland-hills-fort-worth), [Keller](https://www.opendoor.com/neighborhood-guide/keller-fort-worth) | | Phoenix | [Willo](https://www.opendoor.com/neighborhood-guide/willo-phoenix), [Encanto](https://www.opendoor.com/neighborhood-guide/encanto-phoenix), [Arcadia](https://www.opendoor.com/neighborhood-guide/arcadia-phoenix) | | Mesa | [Eastmark](https://www.opendoor.com/neighborhood-guide/eastmark-mesa) | | Scottsdale | [Old Town Scottsdale](https://www.opendoor.com/neighborhood-guide/old-town-scottsdale-scottsdale) | | Los Angeles | [Silver Lake](https://www.opendoor.com/neighborhood-guide/silver-lake-los-angeles), [Los Feliz](https://www.opendoor.com/neighborhood-guide/los-feliz-los-angeles), [Studio City](https://www.opendoor.com/neighborhood-guide/studio-city-los-angeles) | | Oakland | [Upper Dimond](https://www.opendoor.com/neighborhood-guide/upper-dimond-oakland), [Laurel](https://www.opendoor.com/neighborhood-guide/laurel-oakland) | | Seattle | [Capitol Hill](https://www.opendoor.com/neighborhood-guide/capitol-hill-seattle) | **Read More** --- *Originally published at [https://www.opendoor.com/articles/calculate-your-mortgage-affordability](https://www.opendoor.com/articles/calculate-your-mortgage-affordability)*