Home Affordability Calculator

Mortgage underwriting sizes a loan against your income using two debt-to-income limits, and this calculator applies both. The front-end ratio caps housing costs at a share of gross monthly income — conventionally 28%. The back-end ratio caps *all* required debt payments together — housing plus car loans, student loans, personal loans and credit card minimums — conventionally at 36%. The binding constraint is whichever produces the smaller housing payment, and which one binds depends on your existing debts. With no other debt, the 28% front-end limit sets the ceiling. With substantial other obligations, the 36% back-end limit takes over, because those payments consume part of the same allowance before the mortgage is considered at all. That is why a car payment reduces the house you qualify for far more than its size suggests. The 28/36 pair is a long-standing underwriting convention, not a regulation. Individual loan programs set their own limits and several accept higher ratios where credit, reserves or down payment are strong. Treat it as a well-calibrated reference point rather than a rule that binds any particular lender.

Once the affordable payment is known, the mortgage formula is run in reverse — solved for the loan amount instead of the payment: max loan = payment × (1 − (1 + i)^-n) ÷ i where i is the monthly rate and n the number of months. The down payment is then added, since it buys house without being borrowed: max price = max loan + down payment This makes the sensitivity of the result easy to see. A larger down payment raises the ceiling dollar for dollar and raises it again indirectly, by improving the loan-to-value ratio. A lower rate lets the same payment carry a larger loan. A longer term does the same thing — and it is the one lever that raises the ceiling without improving your position, since it increases total interest and slows equity accumulation. If the house only fits over 30 years and not 20, that is information about the price, not about the financing.

This is the most important limitation of the estimate, and it runs in the optimistic direction. The calculator treats the affordable payment as principal and interest, and reports a price on that basis. A lender counts the full housing cost inside the 28%: principal, interest, property taxes, homeowners insurance, any mortgage insurance, and HOA or condo dues where they apply. Those additions are not marginal. Property taxes vary dramatically by state, county and municipality, and insurance is priced by property and location. Together they can consume a substantial share of the housing allowance before any of it reaches the loan — which means the price a lender actually approves may be well below the figure here. The adjustment is straightforward if you have local numbers: estimate the monthly taxes, insurance and dues for the area you are shopping in, subtract them from 28% of your gross income, and treat the remainder as the payment this calculator should be sized against. Without that adjustment, read the result as a ceiling with known slack in it, not as a target.

The denominator is gross monthly income — before income tax withholding, before Social Security and Medicare, before health premiums and retirement contributions. That is the underwriting convention, and it is why an approval can feel tighter in practice than on paper: 28% of gross is a noticeably larger share of what actually reaches your account. Lenders also count income they can document and reasonably expect to continue. Salary supported by pay stubs is straightforward. Bonuses, commissions, overtime and self-employment income are typically averaged over a period and evidenced by tax returns or statements, so entering an optimistic figure here produces a ceiling an underwriter will not reproduce. And the ratios are only part of the decision. Credit history, the length and stability of employment, cash reserves after closing, the property's appraised value and the loan program all shape what is actually offered — as does the down payment, which affects both the rate and whether mortgage insurance is required. A useful private cross-check: rerun the calculation with your take-home pay in the income field. The result will be lower and is closer to what the payment will feel like month to month.

This page produces an estimate. A preapproval is a lender's conditional assessment based on documents you supply and a credit check, and it is what sellers and agents treat as meaningful. Getting one before shopping is worth doing for a second reason: it tells you the rate you actually qualify for, which changes the ceiling more than most people expect. A preapproval is also not a budget. It reflects the lender's estimate of your likelihood of repaying, which is a different question from what leaves room in your life for everything else — childcare, saving, retirement, travel, or simply slack. Buying also carries costs that never appear in a payment calculation. Closing costs are paid at settlement and are separate from the down payment. Maintenance and repairs become yours, and unlike rent they arrive unevenly. Moving costs, immediate furnishing, and any period of carrying two housing costs at once are real and routinely underestimated. The standardized Loan Estimate a lender provides lets you compare offers on identical terms, and comparing more than one is worthwhile since rates and fees differ for the same borrower on the same day.