Home Affordability Calculator

The headline price is the purchase price your inputs can support at the target DTI, after solving for the loan amount that keeps the total housing payment (including tax, insurance, PMI and HOA) within budget. The ratios group shows both DTI figures so you can see how close you are to common lender thresholds, and how much of the price is covered by your down payment versus the loan.

Enter gross household income before tax and the monthly minimum payments on debts that appear on your credit report. Utilities, groceries, phone bills and insurance premiums are not counted as debts in a lender's DTI calculation.

Set the target debt-to-income ratio you want to test. Conventional underwriting commonly accepts up to about 43-50% depending on the program and compensating factors such as reserves and credit score, but a lower target leaves more room in your budget.

Adjust the loan and ownership assumptions to match your market: local tax rate, a real insurance quote and HOA dues if applicable. Then compare the resulting price with actual listings before deciding it is realistic.

The calculation runs in three steps.

Maximum housing payment = (monthly income × target DTI) − monthly debts

Fixed costs (insurance, HOA) are subtracted, leaving the amount available for principal, interest, property tax and PMI. The loan amount is then found by inverting the mortgage payment formula:

P = M × [ (1 + r)^n − 1 ] / [ r(1 + r)^n ]

Because property tax and PMI depend on the home price, which itself depends on the loan, the calculator solves the two together iteratively until the price stops changing. Finally:

Affordable price = loan amount + down payment

Front-end vs back-end DTI

The front-end (housing) ratio is your total housing payment divided by gross monthly income. The back-end ratio adds all other monthly debt payments. Lenders generally weigh the back-end ratio most heavily.

On $110,000 of annual income, gross monthly income is $9,167. At a 43% target DTI the total debt allowance is $3,942. Subtracting $500 of existing debt payments leaves $3,442 for housing.

After $150/month insurance, the remainder covers principal, interest, tax and PMI. At 6.5% over 30 years with a 1.1% tax rate and $60,000 down, that supports a loan near $400,000 and a purchase price of roughly $460,000 — with a housing ratio around 37% and a back-end ratio at the 43% target.

Existing debt load

Every dollar of monthly debt payment reduces the housing payment available at a fixed DTI target, directly lowering affordable price.

Down payment size

More cash down reduces the loan amount and can eliminate PMI, both of which raise the affordable price for the same monthly budget.

Interest rate

A higher rate means each dollar of payment buys less loan principal, shrinking the price you can support.

Local property tax rate

Because tax is a percent of price, a high-tax county reduces the loan (and price) that a fixed budget can support.

Target DTI chosen

Raising the target ratio increases the calculated price but also increases financial risk if income drops or expenses rise.

• Using net (take-home) pay instead of gross income

  Lenders calculate DTI against gross income, so using net pay understates how lenders will actually view your ratios.

• Leaving out debts not on a credit report

  Only debts appearing on a credit report count toward lender DTI; informal obligations shouldn't be included, but real ones shouldn't be omitted either.

• Targeting the maximum DTI a lender allows

  Qualifying at 43-45% back-end DTI leaves little room for savings, maintenance or income disruption.

• Ignoring PMI and property tax scaling

  Both rise with home price, so a higher price target reduces the loan-only budget faster than buyers expect.

• Skipping closing costs in cash planning

  The down payment entered here is only the amount applied to the price; closing costs are an additional, separate cash need.

• Test a lower DTI target (such as 33-36%) to see a more conservative, comfortable price alongside the maximum.
• Pay down a revolving balance before applying — even a small reduction in monthly debt payments can raise the affordable price.
• Use the actual local property tax rate rather than a national average; it materially changes the result in high-tax counties.
• Compare the calculated price against real listings in your target area before treating it as a shopping budget.
• Get a written pre-approval before house-hunting seriously — it reflects your actual credit file and lender-specific guidelines.

A lender's pre-approval can differ because it applies underwriting-specific DTI limits, verifies and sometimes discounts certain income types, and layers in credit score, reserves and loan program requirements this calculator does not model. Closing costs, which are not covered by this estimate, also affect how much cash is truly available for a down payment.

What this calculator assumes

• Gross (pre-tax) income is used, which is how lenders calculate DTI.
• The full down payment entered is available after closing costs are paid.
• Property tax is a flat percentage of purchase price, which ignores assessment ratios and exemptions.
• The interest rate is fixed for the whole term.

What it does not account for

• Credit score, employment history, reserves and loan program, all of which affect approval.
• Closing costs, moving costs and post-purchase expenses.
• Student loan payment calculation rules, which differ by loan program for deferred loans.
• Income that lenders discount or exclude, such as recent self-employment or unverified bonuses.

• CFPB — Debt-to-income ratio explained