💰 Mortgage Affordability Calculator
Find out how much house you can afford based on your income, debts, and down payment with DTI ratio analysis
How This Calculator Works
This calculator determines your maximum affordable home price using the 28/36 debt-to-income ratio rule that virtually all mortgage lenders follow. The two ratios are: Front-end ratio (28%): Housing costs (PITI - Principal, Interest, Taxes, Insurance) shouldn't exceed 28% of gross monthly income. Back-end ratio (36%): Total debt payments (housing + car loans + credit cards + student loans + personal loans) shouldn't exceed 36% of gross income.
The calculator works backward from your income to determine the maximum loan amount, then adds your down payment to show the maximum home price you can afford. It uses both ratios and shows you the tighter constraint. If you have significant existing debt, the back-end ratio typically limits you. With little debt, the front-end ratio applies.
Lenders use these ratios to ensure you can comfortably afford the mortgage while maintaining your other financial obligations. Staying within these limits protects you from becoming "house poor" - owning a home but having no money left for anything else.
Example Calculation
Real-World Example: First-Time Homebuyer
Income & Debts: $80,000 annual income ($6,667/month gross), $400 car payment, $150 student loan payment, $100 credit card minimum = $650 total existing debt
Down Payment: $50,000 saved (will use for 20% down to avoid PMI)
Loan Terms: 7% interest rate, 30-year fixed mortgage
Front-End Limit: 28% of $6,667 = $1,867 maximum for PITI. Assuming $300 property tax + $150 insurance = $450, leaving $1,417 for P&I payment. At 7% for 30 years, this supports a ~$213,000 loan.
Back-End Limit: 36% of $6,667 = $2,400 max total debt. Subtract $650 existing = $1,750 available for housing. After $450 tax/insurance, that's $1,300 for P&I, supporting a ~$195,000 loan.
Result: Back-end ratio is tighter. Max loan $195k + $50k down = $245,000 maximum affordable home. Your existing debts reduced affordability by ~$18k compared to someone debt-free.
Common Questions
Can I exceed the 28/36 rule with excellent credit?
Yes - lenders with strong credit (740+), large down payments (20%+), and significant cash reserves may approve up to 43-50% back-end ratios. FHA loans allow up to 43% officially, sometimes 50% with compensating factors. However, qualifying doesn't mean it's wise. Higher ratios leave minimal cushion for emergencies, home repairs, or income disruptions. Many people who stretched to buy during the 2008 crisis lost homes when circumstances changed. Conservative borrowing = financial peace.
Should I pay off debt before buying a home?
Paying off high-interest debt (credit cards 18%+) before buying makes mathematical sense - you're losing more to interest than you'd gain from homeownership. Car loans and student loans at 4-7% are less clear - depends on whether you'd rather buy sooner or afford more home. Use our calculator to compare: How much more home can you afford if you pay off $10k in debt first? Often paying off a $400 car payment can increase buying power by $50-70k. Run the numbers for your specific situation.
Do HOA fees count toward the 28% housing limit?
Yes! Lenders include monthly HOA/condo fees in your housing costs alongside PITI. If you're looking at condos with $350/month HOA fees, that comes straight out of your 28% allowance, reducing how much mortgage you can afford. A $350 HOA fee can reduce your maximum loan by $50-60k. Always factor in HOA fees when determining affordability - they're mandatory and often increase 3-5% annually.