Mortgage Affordability Calculator

Mortgage affordability refers to how much of a home loan you can comfortably carry given your income, existing debts, and financial goals. Lenders use two key benchmarks to evaluate affordability: the 28% front-end ratio (housing costs should not exceed 28% of gross monthly income) and the 36% back-end ratio (total debt payments, including housing, should not exceed 36% of gross monthly income). These are collectively known as the 28/36 rule or the Debt-to-Income (DTI) rule.

Understanding your affordability limit before shopping for a home prevents you from falling in love with a house you cannot sustainably afford. It also gives you a realistic budget for down payment savings, closing costs, and ongoing maintenance expenses.

The front-end ratio (also called the housing ratio) limits your monthly housing costs — principal, interest, property taxes, and homeowners insurance (PITI) — to 28% of your gross monthly income. For example, if you earn $85,000 per year ($7,083/month gross), your maximum monthly PITI payment should be around $1,983.

The back-end ratio limits your total monthly debt obligations — including housing, car loans, student loans, credit card minimums, and other recurring debts — to 36% of gross monthly income. This more conservative threshold accounts for all financial obligations.

Our calculator computes both the conservative (28%) and aggressive (36%) scenarios so you can see the full range of homes potentially within reach, from a cautious target to the lender maximum.

Beyond income and debts, several variables significantly impact how much house you can afford:

• Down payment: A larger down payment reduces your loan amount and may eliminate PMI (Private Mortgage Insurance), lowering monthly costs.
• Interest rate: Even a 0.5% difference in mortgage rate can change your maximum home price by tens of thousands of dollars.
• Loan term: 15-year mortgages have higher monthly payments but lower total interest. 30-year loans spread payments out further.
• Property taxes: Tax rates vary widely by location (0.3% to 2.5% annually) and are a major component of monthly housing costs.
• Credit score: Higher credit scores typically qualify for lower interest rates, improving affordability.

• Pay down existing debts (car loans, student loans) before applying — this directly improves your DTI ratio.
• Save a larger down payment to reduce loan size and potentially qualify for better rates.
• Improve your credit score by paying bills on time and keeping credit utilization below 30%.
• Consider adjustable-rate mortgages (ARMs) if you plan to sell or refinance before the rate adjusts.
• Shop multiple lenders — rate differences of 0.25–0.5% are common and add up to thousands over the life of the loan.
• Explore first-time homebuyer programs that offer down payment assistance or lower rate options.