Mortgage affordability calculator
Turn an entered debt-to-income cap into loan principal.
- Formula and assumptions shown
- Table and CSV export
- Runs in your browser
How it works
The calculator multiplies gross monthly income by the DTI percentage you enter to estimate a maximum total monthly debt amount. It subtracts existing monthly debt and the property costs you entered, then solves the remaining principal-and-interest payment for loan principal.
Maximum total debt payment = gross monthly income × entered DTI limit; available principal-and-interest payment = max(0, maximum total debt payment − existing monthly debt − entered monthly ownership costs); solve the amortization equation for principal.
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 entered DTI limit is applied to total monthly debt.
- Existing debt, taxes, insurance, HOA, and PMI reduce the available principal-and-interest payment; taxes and insurance are entered as annual amounts and divided by 12.
- The loan uses a fixed rate and fully amortizes over the entered term.
- Down payment, closing costs, other household priorities, eligibility, and lender approval are excluded.
Worked example
$120,000 gross annual income and a 36% DTI cap
The cap allows $3,600 in total monthly debt. After $500 existing debt and $450 of entered monthly tax and insurance, $2,650 remains for principal and interest. At 6.5% for 30 years, that supports about $419,258.67 of loan principal.
Step by step
- Gross monthly income. $120,000 of gross annual income ÷ 12 = $10,000 a month.
- Apply the DTI cap. $10,000 × 36% = $3,600, the most all monthly debt payments, including the new housing payment, may total under this cap.
- Subtract existing debt and ownership costs. Property tax of $3,600 ÷ 12 = $300 plus insurance of $1,800 ÷ 12 = $150 gives $450 of ownership costs. $3,600 − $500 existing debt − $450 = $2,650 left 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. $2,650 ÷ 0.00632068 = $419,258.67 of loan principal, the largest loan whose payment fits in the $2,650.
How to read your result
The headline, Affordable loan principal, is the largest fixed-rate loan whose principal-and-interest payment fits inside the DTI cap after existing debts and ownership costs. It is a loan amount, not a home price. To turn it into a price range, add the down payment you plan to make; closing costs are paid from the same cash but do not raise the price you can pay.
Maximum total debt payment is gross monthly income times the DTI percentage. Available principal and interest payment is what remains after existing debt and Monthly ownership costs (the monthly total of the tax, insurance, HOA, and PMI you entered). If debts and ownership costs already use up the cap, the available payment and the loan both show $0. The table lists the same figures in order, so you can see which item takes the largest share of the cap.
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 the ratio, which is why a loan that passes a DTI test can still strain a monthly budget.
What changes the result most
- Interest rate
- At 7.5% instead of 6.5%, the same $2,650 payment supports $378,996.71 of principal, which is $40,261.96 less.
- Existing monthly debt
- Raising existing debt from $500 to $900 a month, for example by adding a $400 car payment, cuts the loan to $355,974.34, which is $63,284.33 less. At 6.5% for 30 years, each dollar of monthly debt removes about $158.21 of borrowing capacity.
- DTI limit
- A 43% cap instead of 36% raises the total debt allowance to $4,300 and the loan to $530,006.25, which is $110,747.57 more. A higher cap increases the loan, not the income available to pay it.
- Loan term
- On a 15-year term the same $2,650 supports only $304,210.49, 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 reduce the amount of the chosen DTI limit available for the proposed home payment.
Does the result include a down payment or closing costs?
No. It estimates loan principal only. Use the down-payment tool to model a separate purchase cash target.
How much house can I afford?
This calculator answers the loan side: the principal that a chosen debt-to-income cap supports. A price range is roughly that loan plus the down payment. With the example’s $419,258.67 loan and a hypothetical $60,000 down payment, the price would be about $479,258.67, and closing costs would be needed in cash on top. Whether the payment fits a household budget depends on take-home pay and spending that the ratio does not see.
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 the percentage as an input rather than assuming one.
More in Home & mortgage
Sources
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.