Mortgage Affordability Calculator
Find out how much home you can afford based on your income, debts, and down payment.
Car loans, student loans, credit cards, etc.
You Can Afford a Home Worth
Mortgage Affordability Scenarios
Comparison of how much house you can afford based on different Debt-to-Income (DTI) ratios.
| Scenario | DTI Ratio | Monthly Budget | Affordable Home Price |
|---|---|---|---|
| 1 Conservative (28% DTI) | 28% | $1,833 | $276,527 |
| 2 Moderate (36% DTI) | 36% | $2,500 | $367,593 |
| 3 Aggressive (43% DTI) | 43% | $3,083 | $447,276 |
How Much House Can You Afford?
Home affordability isn't just about the purchase price—it's about your total monthly housing cost relative to your income and existing debt obligations. Lenders use standardized ratios to determine maximum loan amounts; understanding these before you shop prevents falling in love with homes outside your financial reality.
---
🛡️ The 28/36 Rule: The Foundation of Mortgage Underwriting
Standard conventional mortgage guidelines follow the 28/36 Rule (also called the front-end/back-end ratio):
Front-End Ratio (28%) Your total monthly housing payment (PITI) should not exceed 28% of gross monthly income.
- Principal (loan repayment)
- Interest
- Taxes (property tax, typically escrowed)
- Insurance (homeowner's insurance + PMI if applicable)
Back-End Ratio (36%) Total monthly debt payments (PITI + all other debts) should not exceed 36% of gross monthly income.
- Includes: car loans, student loans, credit card minimums, personal loans, child support
---
📊 DTI Limits by Loan Type
Different loan programs accept different debt-to-income ratios:
| Loan Type | Max Front-End DTI | Max Back-End DTI | Down Payment Minimum | |---|---|---|---| | Conventional (Fannie/Freddie) | 28% | 36–43% | 3–20% | | FHA Loan | 31% | 43–50%* | 3.5% | | VA Loan (Veterans) | No limit | 41%* | 0% | | USDA Loan (Rural) | 29% | 41% | 0% | | Jumbo Loan | 28% | 36–43% | 10–20% |
*Automated underwriting may approve higher DTIs with compensating factors (large cash reserves, high credit score).
---
💰 How Interest Rates Change Your Buying Power
Interest rate changes have a dramatic impact on affordability. At the same $2,000/month PITI budget (before taxes and insurance):
| Rate | Maximum Loan Amount (30-yr) | Home Price (20% down) | |---|---|---| | 5.0% | $372,600 | ~$466,000 | | 6.0% | $333,600 | ~$417,000 | | 6.5% | $316,400 | ~$396,000 | | 7.0% | $300,600 | ~$376,000 | | 7.5% | $285,900 | ~$357,000 | | 8.0% | $272,200 | ~$340,000 |
A 1% rate increase reduces buying power by approximately 10–11%.
---
🏦 Private Mortgage Insurance (PMI)
If your down payment is less than 20%, conventional lenders require PMI—insurance that protects the lender (not you) if you default. PMI typically costs 0.5–1.5% of the loan amount annually, added to your monthly payment.
- $400,000 loan at 1% PMI**: $4,000/year = **$333/month added to your payment
- PMI cancels automatically when your loan balance reaches 80% of original value
- You can request cancellation when you reach 80% LTV through appreciation or paydown
- FHA loans have MIP (Mortgage Insurance Premium) that lasts the loan's life unless you refinance
📈 Down Payment Strategies
| Down Payment | PMI Required | Impact | |---|---|---| | 3% (Conventional) | Yes | Lowest entry; highest monthly cost | | 3.5% (FHA) | Yes (MIP, permanent) | Flexible credit requirements | | 5–10% | Yes | Moderate PMI cost | | 20% | No | No PMI; best monthly payment | | 25%+ | No | May qualify for better rates |
Down payment assistance programs: Many state and local programs offer grants or forgivable loans for first-time buyers. Check your state's Housing Finance Agency (HFA) for available programs.
---
🔑 Beyond the Calculator: Pre-Approval
A mortgage pre-approval (not just pre-qualification) gives you a conditional commitment from a lender at a specific loan amount. It requires a hard credit pull and verification of income, assets, and employment. Pre-approval:
- Shows sellers you're a serious buyer
- Locks in a rate for 60–90 days (with a rate lock option)
- Identifies any credit issues before you're under contract
- Pay stubs (last 30 days), W-2s (last 2 years)
- Bank/investment account statements (last 2–3 months)
- Tax returns (last 2 years, especially for self-employed)
- Photo ID
Frequently Asked Questions
Q: What is the 28/36 rule for mortgages?
A: The 28/36 rule states your monthly housing costs (principal, interest, taxes, insurance—PITI) should not exceed 28% of gross monthly income, and your total monthly debt payments should not exceed 36%. For example, on a $100,000/year income ($8,333/month), maximum PITI is $2,333 and maximum total debt is $3,000. These are guidelines—FHA loans can go to 31%/50% and VA loans don't have a front-end limit.
Q: What is DTI and how does it affect mortgage approval?
A: DTI (Debt-to-Income ratio) is your total monthly debt payments divided by gross monthly income. Lenders calculate two DTIs: front-end (housing costs only) and back-end (all debts). Most conventional lenders cap back-end DTI at 43%, though automated underwriting may approve up to 50% with strong compensating factors like excellent credit or large reserves. Reducing existing debt (car loans, student loans) before applying directly increases your maximum mortgage amount.
Q: How much do I need for a down payment?
A: The minimum varies by loan type: Conventional loans start at 3%, FHA at 3.5% (with MIP insurance), VA and USDA loans require 0% for qualifying borrowers. Putting down 20% eliminates PMI (Private Mortgage Insurance), which can add $200–$500/month on a $400,000 loan. Many state housing agencies offer down payment assistance programs for first-time buyers—check your state's Housing Finance Agency for grants and forgivable loans.
Q: How does the interest rate affect home affordability?
A: Dramatically. A 1% increase in mortgage rate reduces your buying power by approximately 10–11% at the same monthly payment. At a $2,000/month principal and interest budget: a 5% rate supports a $372,600 loan vs. a 7% rate supporting only a $300,600 loan—a $72,000 difference. Rate changes affect both your approved loan amount and your monthly payment on any given purchase price.
Q: What is PMI and when can I remove it?
A: PMI (Private Mortgage Insurance) is required by conventional lenders when your down payment is less than 20%. It protects the lender (not you) if you default. Cost: typically 0.5–1.5% of the loan amount annually, added to your monthly payment. PMI automatically cancels when your loan balance reaches 80% of the original home value (through payments). You can request early cancellation if the value has appreciated to an 80% LTV—verified by an appraisal. FHA loans have MIP that lasts the loan's life unless you refinance.
Example Scenarios
This really put things into perspective. I was looking at houses way outside my 28/36 comfort zone.
Clean interface and easy to use. The property tax estimate feature is very helpful.
Helpful for planning my house hunt next year.
Official Sources & Authority References
Important Disclaimer
This calculator provides estimates for informational purposes only and does not constitute tax, legal, or financial advice. Tax laws change annually — verify figures with HMRC or IRS guidance, or consult a qualified tax professional before making financial decisions.
Explore More Tools
View All Tools →
LLC Filing & Registration Cost Calculator
Estimate the total cost to form and maintain an LLC in any US state, including filing fees and annual taxes.
UK Take Home Pay Calculator 2026/27
Calculate your net salary after Income Tax, National Insurance, and Student Loan repayments.
Mortgage Extra Principal Calculator
See how much time and interest you save by adding extra monthly principal payments.