Home Affordability Calculator
Find out how much house you can afford based on your income, debts, and down payment. Calculate your maximum home price using DTI guidelines.
Income & Debts
Your financial situation
Monthly: $8,333
Car loans, student loans, credit cards, etc.
DTI Limits
Loan & Property Costs
Mortgage and housing expenses
If LTV > 80%
You Can Afford
With $80,000 down payment (21.6%)
How Home Affordability Works
Lenders use debt-to-income (DTI) ratios to determine how much you can borrow. These ratios compare your housing costs and total debts to your gross monthly income, ensuring you can comfortably afford your mortgage.
The 28/36 Rule
Front-End Ratio: 28%
Housing costs (PITI) should not exceed 28% of gross monthly income.
Back-End Ratio: 36%
Total debt payments should not exceed 36% of gross monthly income.
Understanding DTI Ratios
Front-End DTI (Housing Ratio)
Measures housing costs relative to income.
Housing DTI = (PITI ÷ Gross Income) × 100PITI Includes:
- • Principal payment
- • Interest payment
- • Property Taxes
- • Insurance (home + PMI)
- • HOA fees
Back-End DTI (Total Debt Ratio)
Measures all debt payments relative to income.
Total DTI = (All Debts ÷ Gross Income) × 100Includes:
- • Housing payment (PITI)
- • Car payments
- • Student loans
- • Credit card minimums
- • Other loan payments
DTI Limits by Loan Type
| Loan Type | Front-End DTI | Back-End DTI | Notes |
|---|---|---|---|
| Conventional | 28% | 36-45% | Higher limits with strong credit/reserves |
| FHA | 31% | 43% | Up to 50% with compensating factors |
| VA | No limit | 41% | Uses residual income instead |
| USDA | 29% | 41% | Rural areas only |
Factors That Affect Affordability
Interest Rate
Lower rates = higher affordability. A 1% rate drop can increase buying power by ~10%.
Down Payment
Larger down payments reduce loan amount and eliminate PMI at 20%+.
Existing Debts
Paying off debts frees up DTI capacity for a larger mortgage.
Property Taxes
High-tax areas reduce how much of your payment goes to principal.
HOA Fees
Monthly HOA fees count toward your housing payment and reduce buying power.
Loan Term
30-year terms have lower payments than 15-year, increasing affordability.
What You Can Afford vs. What You Should Buy
Just because a lender will approve you for a certain amount doesn't mean you should spend it. Consider these factors:
Beyond DTI - Your Real Budget
- • Childcare and education costs
- • Retirement savings goals
- • Emergency fund contributions
- • Lifestyle expenses (travel, hobbies)
- • Future income changes
Hidden Costs of Homeownership
- • Maintenance (1-2% home value/year)
- • Utilities (often higher than renting)
- • Furnishing larger spaces
- • Landscaping and yard care
- • Major repairs (roof, HVAC, etc.)
Tips to Increase Affordability
Pay Down Existing Debt
Eliminating a $400/month car payment could increase your home buying power by $70,000+.
Improve Your Credit Score
Better credit = lower interest rate. Going from 680 to 740 could save 0.5%+ on your rate.
Save a Larger Down Payment
20% down eliminates PMI, saving $100-300/month on most loans.
Consider Lower-Cost Areas
Lower property taxes and insurance costs mean more of your payment goes to the house.
Frequently Asked Questions
What income counts toward mortgage qualification?
Lenders consider stable, verifiable income: salary, hourly wages (2+ year history), self-employment (2 years), bonuses/commission (2 year average), rental income, retirement/pension income, and some government benefits.
Why is my actual approval different from this calculator?
Lenders also consider credit score, employment history, down payment source, reserves after closing, and property type. This calculator provides an estimate based on income and debts only.
Should I buy at my maximum affordability?
Generally no. Most financial advisors recommend staying below your max to maintain financial flexibility. A good rule: if the payment feels tight now, it will feel worse when unexpected expenses arise.
How much should I really spend on housing?
Many experts recommend the "25% rule" - keeping housing costs at 25% of take-home (net) pay, not gross. This is more conservative than lender limits but provides better financial stability.