Mortgage Calculator for First-Time Home Buyers: What Can You Afford?

September 5, 2026 · 6 min read

Buying your first home is the biggest financial decision most people make. The monthly payment you see advertised is rarely the full cost — property taxes, insurance, PMI, and maintenance all add up. Before you start house hunting, you need to know exactly what you can afford, not what a lender says you can borrow.

What Is Included in a Mortgage Payment

Your monthly payment has four components (PITI): Principal (the loan amount being repaid), Interest (the cost of borrowing), Taxes (property taxes, usually escrowed), and Insurance (homeowners insurance, also escrowed). If your down payment is less than 20%, add PMI (Private Mortgage Insurance) — typically 0.5% to 1% of the loan amount annually.

The 28/36 Rule

Lenders use the 28/36 rule: your mortgage payment should not exceed 28% of your gross monthly income, and your total debt payments should not exceed 36%. If you earn $6,000/month, your mortgage payment should be under $1,680, and all debt payments (mortgage + car + student loans + credit cards) should be under $2,160.

Down Payment Impact

20% down eliminates PMI and gets the best interest rates. 10% down is common but adds PMI. 3-5% down is possible with FHA loans but means higher monthly payments and more interest over the life of the loan. On a $350,000 home, the difference between 5% and 20% down is about $250/month in payments.

Interest Rates Matter More Than You Think

On a $300,000 30-year mortgage, the difference between 6% and 7% interest is about $200/month — and $72,000 over the life of the loan. A 0.25% rate reduction saves about $50/month or $18,000 total. Shopping multiple lenders and improving your credit score before applying pays off enormously.

Try It Now

Our free Mortgage Calculator handles this instantly — no signup, no limits.

Also useful: our Compound Interest Calculator for related calculations.