Zillow House Affordability Calculator
Understanding your budget is the first step in finding your dream home. Zillow’s House Affordability Calculator helps you determine how much you can afford, making your home search more manageable.
- Enter your monthly income after taxes.
- Enter your monthly debt payments (credit cards, car loans, etc.).
- Enter the percentage of the home’s value you plan to use as a down payment.
- Enter the current interest rate for a 30-year mortgage.
- Choose your preferred loan term.
- Click ‘Calculate’ to see your affordability range and a visual representation.
The calculator uses the following formula to determine your maximum affordable home price:
Maximum Affordable Price = (Monthly Income – Monthly Debt) * (1 – Down Payment %) / (Interest Rate * (1 + Interest Rate ^ Loan Term))
| Region | Average Home Price |
|---|---|
| Northeast | $382,700 |
| Midwest | $258,200 |
| South | $295,300 |
| West | $649,000 |
| Loan Term | Average Rate |
|---|---|
| 30-year | 3.10% |
| 15-year | 2.42% |
- Consider saving for a larger down payment to reduce your monthly mortgage payment and avoid private mortgage insurance (PMI).
- Shop around for the best mortgage rate. Rates can vary significantly between lenders.
- Remember, affordability is not just about the mortgage payment. Consider property taxes, homeowners insurance, and maintenance costs.
What is the 28/36 rule?
The 28/36 rule is a guideline used by lenders to determine how much a borrower can afford to pay for housing. It suggests that a borrower should spend no more than 28% of their gross monthly income on housing costs and no more than 36% on total debt, including housing costs.
What is PMI?
Private Mortgage Insurance (PMI) is an insurance policy that protects lenders against default on a home loan. It’s typically required when the borrower’s down payment is less than 20% of the home’s value.
For more information on home affordability, check out these authoritative sources: