Mortgage Affordability Calculator
See how much home you can afford using industry-standard DTI limits.
This calculator estimates the "maximum purchase price" you can afford based on your income, existing monthly debts, target DTI ratios, interest rate, loan term, and local costs like property taxes, insurance, and HOA. It also accounts for program fees (PMI/MIP/USDA annual) when applicable.
Your Estimated Affordability
- P&I
- Taxes
- Insurance
- HOA
- PMI/MIP (if any)
How we compute affordability
We compute the allowable housing payment using the smaller of your front-end DTI (housing ÷ income) and back-end DTI (housing + debts ÷ income). Then we solve for the maximum loan amount such that your all-in monthly payment (P&I + taxes + insurance + HOA + any program fee) does not exceed that allowable payment.
PMI/MIP/USDA fees are approximated as a monthly percent of loan balance; actual lender calculations can vary.
Inputs
Mortgage Affordability Guide
Understand the inputs, lender rules, and real-world costs behind your maximum affordable price.
How it works
The calculator estimates the maximum purchase price you can afford by solving for the highest loan amount whose all-in monthly payment (principal & interest + estimated taxes, insurance, HOA, and any program fees like PMI/MIP/USDA annual) fits within standard lender debt-to-income (DTI) limits.
We compute your allowable housing payment as the smaller of:
- Front-end DTI: housing ÷ gross income (e.g., 28%), and
- Back-end DTI: (housing + other monthly debts) ÷ gross income (e.g., 36–45%).
Then we find the maximum loan amount that keeps your all-in payment at or below that limit and derive the price from your down-payment choice. For definitions, see DTI, PITI, interest rate, and closing costs.
What you’ll need to input
- Annual gross household income: All borrowers’ pre-tax income.
- Monthly debt payments: Auto, student loans, credit cards, personal loans, etc.
- Down payment: Dollar amount or percent of price.
- Location: Use a realistic tax rate for your area (annual % of price).
- Loan term & rate: 15- or 30-year are common; use today’s market rate as a baseline.
- HOA dues: If buying a condo or in an HOA community.
How affordability is determined
Understanding DTI (Debt-to-Income)
DTI compares debts to income. Lenders use both front-end and back-end DTI to set safe payment limits. Many programs prefer a back-end DTI at or below 43%, though some allow higher with strong profiles.
The 28/36 guideline
A classic rule of thumb: keep housing ≤ 28% of gross income and total debt ≤ 36%. Today, program caps can be higher, but this benchmark remains a sensible target for long-term affordability.
Credit score and pricing
Strong credit typically earns a lower interest rate, which increases the price you can afford for the same payment. Improving credit and reducing card balances before applying can meaningfully help.
Down payment & mortgage insurance
More down reduces your loan amount, lowers P&I, and may avoid PMI on conventional loans. FHA and USDA use program fees regardless of down payment; VA has no monthly MI.
Loan term & interest rate
A 30-year loan maximizes monthly affordability (lower payment). A 15-year costs less interest over time but reduces affordability because of the higher monthly payment. Compare rate and payment impact across terms and see our ARM vs. Fixed-Rate guide.
Beyond your monthly payment
Closing costs
Expect ~2–5% of the loan amount in one-time closing costs. Learn more in Closing Costs Explained.
Property taxes & homeowners insurance
These escrowed items are part of your monthly PITI. Tax rates vary by county and assessed value; use a local estimate for accuracy.
HOA fees
Condos and many communities charge monthly dues for common areas and amenities. Include them in your affordability plan.
Home maintenance & repairs
Budget for upkeep. A common guideline is 1–2% of home value per year, but it depends on age, size, and condition.
How to use your results
Estimate affordable price
Use the calculator’s maximum price as a ceiling. Shop below it to allow for taxes, insurance changes, and savings goals.
Break down PITI
Review the P&I vs. taxes/insurance/HOA split. If non-mortgage items are high, consider areas with lower tax rates or different property types.
Plan your budget
Keep an emergency fund (3–6 months of expenses). If your income varies, target a lower DTI than the maximum. You can always prepay principal later when cash flow is strong.
Ready to experiment with payments? Try the Mortgage Payment Calculator.
Frequently asked questions
What if my income fluctuates?
Average variable income over the past 12–24 months and be conservative. Lenders often average commission/bonus/self-employment income and may require proof of stability. Consider a lower DTI target and larger cash reserve.
How does debt affect my mortgage?
Every monthly debt reduces your back-end DTI capacity, which lowers your allowable housing payment. Paying down or consolidating high payments can noticeably increase affordability.
Can I afford more than the calculator suggests?
You could, but it increases risk. The estimate reflects common underwriting limits and realistic assumptions. If you stretch, make sure you still meet savings goals and have 3–6 months of expenses saved.
Do I need 20% down to avoid PMI?
Conventional loans usually require PMI under 20% down, but PMI can cancel as equity grows. FHA and USDA have program fees regardless of down payment; VA has no monthly MI.
15-year vs. 30-year—which is better?
15-year: higher payment, much less total interest. 30-year: lower payment (more affordability) and the option to prepay. Pick the structure that best fits your cash-flow and time horizon.
Ready to get started?
- Gather pay stubs, W-2s/1099s, bank statements, and debt statements.
- Check your credit and address any quick wins (utilization, errors).
- Compare loan types: ARM vs. Fixed-Rate.
- Review closing costs and create a move-in reserve.
- Questions? Contact us.