Mortgage affordability calculator
Find the home price your income, debts, and down payment support.
- Formula and assumptions shown
- Table and CSV export
- Runs in your browser
How it works
The calculator applies two common lender ratios to gross monthly income. The front-end (housing) ratio caps the whole housing payment; the back-end (debt-to-income) ratio caps the housing payment plus existing monthly debts. It uses whichever leaves the smaller housing budget and shows which limit binds. After the tax, insurance, HOA, and PMI you enter, the rest is the principal-and-interest payment, which it solves for a loan amount. Adding your down payment gives the maximum home price.
Housing budget = the lower of gross monthly income × front-end ratio and gross monthly income × back-end ratio − existing monthly debt; principal-and-interest payment = max(0, housing budget − monthly ownership costs); loan = that payment solved through the amortization formula; maximum home price = loan + down payment.
This ratio-based estimate does not decide what fits your household budget or predict approval. Lenders may use different income definitions, debt definitions, limits, and underwriting standards.
Assumptions
- Gross annual income is divided by 12. The front-end ratio caps the full housing payment (principal, interest, tax, insurance, HOA, and PMI); the back-end ratio caps that payment plus existing monthly debt.
- Taxes and insurance are entered as annual dollar amounts for the kind of home you are pricing and divided by 12; they do not scale with the resulting price.
- The loan uses a fixed rate and fully amortizes over the entered term.
- The down payment is added to the loan to give the price. Closing costs, reserves, other household priorities, eligibility, and lender approval are excluded.
Worked example
Worked examples on this page use US dollars.
$120,000 income, $80,000 down, 28% and 36% ratios
Gross monthly income is $10,000. The 28% housing ratio allows $2,800; the 36% ratio allows $3,600 of total debt, or $3,100 for housing after $500 of existing debt, so the $2,800 housing limit binds. After $450 of monthly tax and insurance, $2,350 remains for principal and interest, which supports about $371,795.43 at 6.5% for 30 years. With $80,000 down, the maximum home price is about $451,795.43.
Step by step
- Gross monthly income. $120,000 of gross annual income ÷ 12 = $10,000 a month.
- Front-end (housing) limit. $10,000 × 28% = $2,800, the most the whole housing payment (principal, interest, tax, insurance, HOA, and PMI) may be.
- Back-end (debt-to-income) limit. $10,000 × 36% = $3,600 for all monthly debts. After $500 of existing debt, $3,100 is left for housing.
- The lower limit binds. $2,800 is less than $3,100, so the 28% housing ratio sets the budget. Property tax of $3,600 ÷ 12 = $300 plus insurance of $1,800 ÷ 12 = $150 is $450 of ownership costs, leaving $2,800 − $450 = $2,350 for principal and interest.
- Payment per dollar borrowed. At 6.5% ÷ 12 = 0.541667% a month over 30 × 12 = 360 payments, each dollar borrowed costs 0.00632068 a month, or $6.32 per $1,000.
- Solve for the loan. $2,350 ÷ 0.00632068 = $371,795.43, the largest loan whose payment fits in the $2,350.
- Add the down payment. $371,795.43 + $80,000 = $451,795.43 maximum home price. The $80,000 is 17.71% of that price, under 20%, so a conventional lender would usually add PMI; entering a PMI quote lowers the loan the same budget supports.
How to read your result
The headline, Maximum home price, is the affordable loan plus the down payment you entered. Affordable loan amount is the largest fixed-rate loan whose principal-and-interest payment fits in the monthly housing budget after ownership costs. Closing costs are paid from separate cash and do not raise the price you can pay.
Limit that binds names the ratio that set the budget. Housing limit at front-end ratio is gross monthly income times the housing ratio; Housing limit at back-end ratio is gross monthly income times the debt-to-income ratio, minus existing debt. Monthly housing budget is the lower of the two, and Available principal and interest payment is what remains after Monthly ownership costs (the monthly total of the tax, insurance, HOA, and PMI you entered). If debts and ownership costs use up the budget, the loan shows $0 and the price equals the down payment.
Property tax and insurance are dollar entries for the kind of home you are pricing, so update them if the result points to a very different home. DTI is measured against gross, pre-tax income, so the payment it allows can be a much larger share of take-home pay. Groceries, utilities, childcare, commuting, savings, and home maintenance are not debts and do not appear in either ratio, which is why a price that passes both tests can still strain a monthly budget.
What changes the result most
- Interest rate
- At 7.5% instead of 6.5%, the same $2,350 payment supports a $336,091.42 loan, so the maximum price falls to $416,091.42, which is $35,704.00 less.
- Existing monthly debt
- Debt up to $800 a month changes nothing here, because the 28% housing ratio binds first. At $900 a month the 36% ratio takes over: housing may use only $3,600 − $900 = $2,700, and the price falls to $435,974.34, which is $15,821.08 less. From then on, each dollar of monthly debt removes about $158.21 of borrowing capacity at 6.5% for 30 years.
- Down payment
- With tax and insurance entered in dollars, each dollar of down payment adds a dollar to the price: $40,000 down gives $411,795.43. A smaller down payment also makes PMI more likely, and a PMI entry reduces the loan.
- Ratio limits
- Raising the debt-to-income limit to 43% changes nothing while the housing ratio binds; the price stays $451,795.43. Raising the housing ratio to 31% makes both limits equal at $3,100, and the price rises to $499,258.67. Above that, the 36% ratio binds instead, so a higher housing ratio adds nothing unless the debt-to-income limit rises too.
- Loan term
- On a 15-year term the same $2,350 supports only $269,771.57, a price of $349,771.57, because each payment has to retire principal twice as fast.
Questions
Does this tell me what a lender will approve?
No. It is a payment-based estimate. Lenders apply their own underwriting, documentation, reserves, credit, and property rules.
Should I include debts?
Yes. Enter recurring monthly debt payments. They count against the back-end ratio. Once that ratio binds, each extra dollar of monthly debt takes a dollar out of the housing budget.
What is the 28/36 rule?
A common guideline: housing costs up to 28% of gross monthly income, and all monthly debts including housing up to 36%. The calculator applies both as editable fields and uses whichever gives the lower housing payment. Fannie Mae's Selling Guide uses 36% as the maximum total ratio for manually underwritten loans, which can be exceeded under stated conditions; other programs set their own limits.
Does the result include closing costs?
No. The down payment you enter is added to the loan to reach the price; closing costs, moving costs, and reserves come from other cash. Use the down-payment tool to plan the total cash for a purchase.
How much house can I afford?
Under the common 28/36 guidelines, the example household with $120,000 of gross income, $500 of monthly debt, and $80,000 down reaches a maximum price of about $451,795.43: a $371,795.43 loan plus the down payment. Change the ratios to match a lender or loan program. Whether the payment fits a household budget depends on take-home pay and spending that the ratios do not see, and closing costs are needed in cash on top.
What debt-to-income ratio do mortgage lenders use?
There is no single limit. Commonly cited reference points are about 28% of gross income for housing costs alone and 36% for all monthly debts, and some loan programs allow higher ratios, in some cases up to about 50%, when other factors such as credit history or cash reserves are strong. Limits vary by program and lender, so the calculator treats both percentages as inputs rather than assuming them.
Common amounts
More in Home & mortgage
Sources
- CFPB: debt-to-income ratio
- CFPB: assess what mortgage payment fits your budget
- Fannie Mae Selling Guide B3-6-02: debt-to-income ratios
These references explain the concepts behind the calculation. They do not endorse this site. Estimates leave out any cost or condition you did not enter.