Home Affordability & DTI Calculator
Calculate your maximum home price based on income, debts, and DTI limits — with a full payment breakdown and scenario comparison.
For educational purposes only. Calculator results are estimates based on the inputs you provide and are not a substitute for professional financial advice. Consult a licensed financial advisor before making investment, borrowing, or retirement decisions.
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How lenders determine what you can afford
Lenders use two key ratios called debt-to-income ratios (DTI) to decide how much mortgage you qualify for. These ratios compare your monthly debt obligations to your gross monthly income (before taxes). Understanding these ratios tells you exactly how lenders will view your application.
Your maximum home price is determined by working backward from these DTI limits: find the monthly housing payment you can afford, then calculate the loan size that produces that payment at your given rate and term, then add your down payment.
Front-end vs back-end DTI
Front-End DTI (Housing Ratio) — target: ≤28%
Your total monthly housing costs (mortgage principal + interest + property tax + insurance) divided by gross monthly income. Most conventional lenders want this below 28%.
Back-End DTI (Total Debt Ratio) — target: ≤43%
All monthly debt payments (housing + car loans + student loans + credit card minimums + other debts) divided by gross monthly income. Most lenders cap this at 43%, though some allow up to 50% with compensating factors.
How to use this calculator
- Gross Monthly Income — Your pre-tax monthly income. Include all reliable income sources.
- Monthly Debt Payments — All existing debt minimums excluding the future mortgage: car loans, student loans, credit card minimums, personal loans.
- Down Payment — The amount you plan to put down. 20% avoids PMI on conventional loans.
- Interest Rate and Term — Use current quoted rates from a lender or mortgage broker for accuracy.
- Click Calculate to see your maximum home price, DTI gauges, and multiple price scenarios.
Frequently asked questions
What is the 28/36 rule?
The 28/36 rule is a traditional guideline: spend no more than 28% of gross income on housing costs and no more than 36% on total debt. These are more conservative than the FHA/conventional limits of 31/43 and give you a larger financial buffer for savings, emergencies, and lifestyle.
Does this calculator account for PMI?
PMI (Private Mortgage Insurance) is not included in this calculator. If your down payment is less than 20%, lenders typically require PMI at a cost of 0.5–1.5% of the loan amount per year. This adds $100–$400/month on a $300,000 loan, which reduces your effective affordability. Factor this into your planning if you are putting down less than 20%.
What counts as monthly debt for DTI purposes?
Include all recurring minimum debt payments: car loans, student loan minimums, credit card minimums, personal loan payments, child support or alimony. Do not include utilities, insurance, groceries, or subscriptions — these are living expenses, not debt.
Should I borrow the maximum I qualify for?
Generally no. Qualifying for a loan amount and comfortably affording it are different things. Lenders look at minimum payments and gross income. They cannot account for your savings goals, childcare costs, irregular expenses, or career uncertainty. Many financial advisors suggest targeting a home price at 3–4x annual gross income rather than the maximum lender approval amount.
Home affordability examples by income
$100,000 household income — what home can you afford?
At $100,000 gross annual income ($8,333/month), the 28% front-end DTI limit allows $2,333/month for housing. At 6.5% for 30 years with 10% down, that monthly payment supports a purchase price of approximately $295,000. With 20% down, the same payment supports approximately $340,000 — because you borrow less and eliminate PMI.
$200,000 household income with $1,500/month in existing debt
At $200,000 income ($16,667/month), the 36% back-end DTI limit allows $5,900 in total monthly debt. With $1,500 already committed to car loans and student loans, $4,400 remains for housing. At 6.5% for 30 years with 20% down, $4,400/month supports a purchase price of approximately $595,000 — the back-end DTI becomes the binding constraint.
20% down vs 5% down — real impact on monthly costs
On a $400,000 home, a 20% down payment ($80,000) means borrowing $320,000 at 6.5%, resulting in a $2,023/month payment with no PMI. A 5% down payment ($20,000) means borrowing $380,000 at 6.5% plus an estimated $250/month in PMI — a total of $2,651/month. The 5% option costs $628 more each month, or $7,536 more per year.
Should I borrow the maximum the lender will approve?
Generally no. Qualifying for a loan and comfortably affording it are different things. Lenders assess minimum payments and gross income — they cannot account for your savings goals, childcare, irregular expenses, or career uncertainty. Many financial advisors suggest targeting a home price no higher than 3–4x annual gross income, regardless of the maximum approval amount.