Mortgage Affordability Calculator

How to use

1. Gather gross monthly income from wages, self-employment draws you can document, and other qualifying sources—then use a conservative figure if your income swings month to month.
2. List minimum monthly debt payments that typically count toward DTI, such as auto loans, student loans, credit-card minimums, and court-ordered support, excluding utilities and groceries.
3. Enter the interest rate and loan term you expect for shopping (for example, today’s 30-year conventional quote), knowing a higher rate will shrink the affordable price quickly.
4. Choose a down-payment percent or dollar amount you can fund after emergency reserves; twenty percent often avoids PMI but is not required for every program.
5. Add realistic monthly property tax, homeowners insurance, and HOA or condo fees for the area you are targeting so the front-end housing ratio is not understated.
6. Read the suggested maximum home price or loan amount as a soft ceiling for search filters, not as a mandate to spend to the max.
7. Lower income or raise debts in a sensitivity run to see how losing overtime or adding a car payment would shrink buying power.
8. Raise the rate by one percentage point as a stress test; affordability often falls sharply even when local list prices stay flat.
9. Cross-check the result against your comfort payment—including maintenance, commuting, and furnishings—because DTI ratios ignore lifestyle costs.
10. Take your preferred scenario to a loan officer for a formal pre-approval letter that underwriters will actually accept with an offer package.

Examples

• Gross income $120,000/year ($10,000/mo), debts $500/mo, 6.5% rate, 30-year term, 20% down, ~$300/mo tax+insurance → rough price often lands near the mid-$400k range under common ~36% back-end DTI heuristics (exact tool output depends on fields).
• Income $90,000/year, 10% down, debts $350/mo, 7% for 30 years → affordable price typically drops versus a 20%-down peer because loan size and possible PMI both rise.
• Dual income $180,000 combined, $800/mo debts, 15% down, 6.25% for 30 years → higher buying power than a single $90k earner, but escrow and HOA in high-tax cities still bite.
• Self-employed illustration: enter $7,000/mo qualified income instead of a peak $10,000 month so the model stays conservative for variable earnings.
• Stress test: same income/debts/down payment at 6% versus 7% often shifts affordable price by tens of thousands of dollars on a large loan.
• Pay off a $400/mo car loan before shopping: back-end DTI improves, which can raise the modeled home price more than many shoppers expect.
• Condo path: $110k income, $200/mo HOA, 5% down—HOA fills housing cost fast, so the affordable purchase price may be lower than a freestanding home with no dues.
• First-time scenario: $75k income, 3.5% down-style cash, $250/mo debts at 6.75%—still run numbers, but confirm actual FHA overlays and mortgage-insurance costs with a lender.
• High-debt case: $140k income with $1,400/mo debts may qualify for far less house than income alone suggests once back-end DTI is applied.
• Rate lock shopping: $125k income, 20% down, debts $600/mo—compare affordability at 6.0%, 6.5%, and 7.0% before you stretch for a dream listing.

FAQ

Which debt-to-income rules of thumb does affordability use?

Many conventional conversations reference a front-end housing ratio near the high twenties and a back-end all-debt ratio near the mid-thirties of gross income, though programs and automated underwriting can stretch or tighten those bands. The calculator mirrors common heuristics rather than every lender’s proprietary engine.

Does the estimate include PMI?

If the tool provides a PMI or mortgage-insurance field, include it when down payment is under 20%. Otherwise subtract a buffer for PMI from your comfortable max price so the headline number is not optimistic.

Why is my lender’s pre-approval different?

Credit score, cash reserves, gift funds, employment history, property type, and condo association reviews all change eligibility. Automated underwriting may approve a higher DTI than a simple online model allows—or deny a seemingly clean file.

Should I borrow the maximum the model shows?

Often no. Stretching to the cap leaves little room for repairs, childcare, job risk, or rising insurance. Many planners deliberately shop below the theoretical max.

Can I use this for an investment property?

Rental rules usually require larger down payments, different DTI treatment of rental income, and stricter reserves. Treat this view as owner-occupied planning unless a lender maps investment overlays for you.

What income should I enter if I am paid commissions?

Use the average a underwriter is likely to count—often a two-year history—rather than your best month. Overstating income inflates price targets and leads to disappointment later.

How do student loans affect affordability?

Student-loan payments usually count toward back-end DTI, whether in repayment or under certain deferred/IBE formulas your lender uses. Enter the payment figure your loan officer says will appear on the application.

Do property taxes change the result a lot?

Yes. High-tax counties can make two identical-looking homes produce very different housing ratios. Always use local tax estimates when comparing neighborhoods.

What about HOA special assessments?

Regular HOA dues belong in monthly housing cost. Special assessments are lumpy and hard to model; ask for association financials before stretching to the max on a condo.

Is renting cheaper than buying at these prices?

Affordability math shows what you might qualify for, not whether buying beats renting. Compare cash for closing, maintenance, and mobility needs separately from DTI.

Can co-borrowers combine income?

If both borrowers will be on the note, lenders generally combine qualifying income and debts. Enter combined figures only when that matches how you will apply.

How private are the numbers I enter?

Estimates are computed in your browser for planning. We do not need access to your bank or credit file; for real underwriting you will share documents securely with a licensed lender, not through this educational page alone.

Formula / Method

Assumptions & Limitations

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