How This Home Affordability Calculator Works
Lenders judge affordability with two debt-to-income (DTI) ratios, and this calculator applies both, then takes the tighter one. The housing ratio (front-end) caps your total housing payment — principal, interest, property tax, insurance and HOA — at 28% of gross monthly income. The total-debt ratio (back-end) caps housing plus all other monthly debt payments at 36% of gross monthly income. Whichever cap is lower sets your monthly housing budget.
From that budget, the calculator works backward to a price. For a price H with down payment D, the monthly payment is the mortgage payment on H − D plus H × tax rate ÷ 12 plus insurance and HOA. It finds the highest price whose payment fits the budget — no PMI is added, so if your down payment is under 20%, treat the result as optimistic and check PMI with the Mortgage Calculator.
housing budget = min(28% × gross monthly income, 36% × gross monthly income − other debts)
Then solve for the price H where P&I(H − down payment) + tax(H) + insurance + HOA = housing budget.
Worked example: $90,000 annual income ($7,500 a month), $400 a month in other debts, $60,000 down, 6.5% for 30 years, 1.1% property tax, $2,400 a year insurance, no HOA. The 28% housing cap is $2,100 a month; the 36% cap is $2,700 − $400 = $2,300 a month — so the housing cap binds at $2,100. Solving backward gives a maximum price of about $315,000: a loan of about $254,900, principal and interest of about $1,611, property tax of about $289, and insurance of $200 — $1,611 + $289 + $200 = $2,100.
Practical tips
28/36 is a lender guideline, not a comfort test. If the payment eats most of your take-home pay, shop below the maximum — the calculator shows the cap, not what feels comfortable.
Paying off a $400-a-month car loan before house-hunting raises the total-debt cap by $400 — often more than a raise of the same size would.
A high-tax state or expensive insurance market lowers your affordable price a lot. Enter your area's real rates, not national averages, before making an offer.
This calculator excludes PMI. With less than 20% down, your true affordable price is lower — model the full payment on the Mortgage Calculator first.