About the Mortgage Affordability Calculator
This mortgage affordability calculator works backwards from your income to the most expensive home a lender is likely to approve. It applies the two debt-to-income (DTI) limits lenders use — a front-end limit on housing costs and a back-end limit on all monthly debts — and then solves for the home price whose full payment (principal, interest, property tax, insurance, HOA and PMI) fits inside both.
Use it before you start browsing listings or talking to a lender, so you know a realistic price ceiling. First-time buyers can test how a larger down payment, a lower rate or paying off a car loan changes the answer; move-up buyers can see what a new income supports.
The default 28% / 36% limits are the classic conventional-loan guideline. Many lenders approve higher back-end ratios (FHA often up to 43% or more), so adjust the limits to match your loan type. The result is a maximum, not a recommendation — leave room for savings, repairs and other goals.
With the default inputs, the maximum home price is $286,804. Change any value above to recalculate instantly.
How to use the mortgage affordability calculator
- 1Enter your household gross income and the monthly minimum payments on all debts.
- 2Enter the cash you can put down (excluding closing costs and reserves).
- 3Set a realistic interest rate and loan term.
- 4Adjust property tax, insurance and HOA for the area you are shopping in.
- 5Change the DTI limits if your lender or loan type uses different ratios.
- 6Read the maximum price, then aim somewhat below it to leave breathing room.
Formula and method
First the calculator finds the largest monthly housing payment H you qualify for: the smaller of your front-end limit times gross monthly income, and your back-end limit times income minus existing debt payments. It then solves for the home price whose full payment equals H, where k is the principal-and-interest payment per dollar borrowed (from the standard amortization formula) and t is the monthly property-tax rate.
If that price leaves you with less than 20% equity, PMI (yearly PMI rate × loan ÷ 12) is added to the payment and the price is solved again. Insurance and HOA dues are fixed monthly costs that do not scale with price. Closing costs are not included — keep cash aside for them separately.
- I
- Gross monthly income (annual ÷ 12)
- D
- Existing monthly debt payments
- k
- Monthly P&I per $1 of loan at your rate and term
- t
- Property tax rate ÷ 12
Worked examples
$85k income, $400 debts, $50k down
Gross monthly income is $7,083, so the 28% housing cap is $1,983 and the 36% total-debt cap leaves $2,150 after debts — housing is the binding limit. With 1.1% tax, $1,500/yr insurance and PMI (because $50,000 is under 20% down), the price that fits is about $286,800.
$120k income, $800 debts, $80k down at 6%
Monthly income is $10,000. The 36% back-end limit ($3,600) minus $800 of debts leaves $2,800, which is below the 28% housing cap, so debts set the limit. That payment supports a home of roughly $435,000.
$60k income with a small down payment
On $5,000 a month, the back-end limit leaves $1,200 for housing. At 7% with PMI on a 10% down payment, that supports a home of about $147,900 — paying down the $600 of other debts would raise the budget noticeably.
Frequently asked questions
What is the 28/36 rule?+
It is a lending guideline: spend no more than 28% of gross monthly income on housing (principal, interest, tax, insurance, HOA, PMI) and no more than 36% on all debt payments combined, including the new mortgage.
How much house can I afford on $100,000 a year?+
With no other debts, 20% down, a 6.5% 30-year rate, 1.1% property tax and $1,500 a year of insurance, a $100,000 income supports about $370,000 under the 28% rule. Debts, rates and local taxes move that figure a lot, so enter your own numbers.
Do lenders use gross or net income?+
Lenders use gross (pre-tax) income for debt-to-income ratios. Because your take-home pay is lower, a payment at the maximum ratio can feel tight — many buyers target a payment below the lender limit.
Which debts count toward DTI?+
Recurring obligations that appear on your credit report or in court orders: car loans, student loans, minimum credit card payments, personal loans, alimony and child support. Utilities, phone bills and groceries are not counted.
Can I get approved with a DTI above 36%?+
Often, yes. Conventional loans can go up to about 45–50% with strong credit and reserves, and FHA loans commonly allow 43% or more. Raise the back-end limit in the calculator to model those programs.
Does this include closing costs?+
No. Closing costs usually run 2%–5% of the price and must be paid in cash on top of the down payment. Use the closing costs calculator to estimate them and keep emergency savings separate too.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.