Home Affordability Calculator
Determine the maximum home price you can comfortably afford based on your income, existing debts, down payment, and standard debt-to-income ratios used by lenders.
How Lenders Decide How Much Home You Can Afford
Lenders use two key ratios to determine how much you can borrow. This calculator computes the maximum home price under each constraint, and the affordability max uses the stricter (lower) of the two ratio limits.
Before committing to that price, it's worth checking whether buying even beats renting at this budget — the rent vs buy calculator compares the two side by side over time.
Front-End Ratio (Housing Expense Ratio)
This measures your total housing cost (principal, interest, taxes, insurance, HOA) as a percentage of gross monthly income. The standard maximum is 28-31%.
Back-End Ratio (Total Debt-to-Income Ratio)
This includes all housing costs PLUS existing debt payments (car loans, student loans, credit cards) as a percentage of gross income. Most lenders cap this at 43%.
Converting Your Payment into a Maximum Home Price
Once the maximum monthly housing payment is determined, the calculator uses the reverse mortgage formula to find the maximum loan amount, then adds your down payment cash to get the maximum home price.
Once you have that maximum price, run the loan amount through the mortgage amortization calculator to see the full year-by-year payment schedule at your actual rate and term.
Worked Example
$100,000 gross annual income, $500/month in existing debts, $60,000 cash available for a down payment, financing at 6.5% over 30 years, $3,600/year property taxes, $1,500/year insurance, no HOA, a 43% total DTI limit, and a 31% front-end (housing-only) ratio.
Inputs Used
- Gross Annual Income: $100,000
- Monthly Debt Payments: $500
- Down Payment Cash: $60,000
- Mortgage Rate: 6.5%
- Loan Term: 30 years
- Property Tax: $3,600/yr
- Insurance: $1,500/yr
- HOA: $0/mo
- Total DTI Limit: 43%
- Front-End Ratio: 31%
Computed Result
- Max Price (Front-End Ratio): $401,472
- Max Price (Total DTI): $480,577
- Recommended Range: $321,177 – $401,472
- Max Monthly Payment: $2,583
How to Read This Result
Most lenders cap total (back-end) DTI at 43% and the front-end housing ratio at 28-31% as common industry guidelines — not a guarantee of loan approval, since underwriting varies by lender and loan program. Here the front-end ratio is the stricter (binding) constraint, capping the max price at $401,472, well below the $480,577 the back-end ratio alone would allow. The recommended range ($321,177–$401,472) trims the top of the binding max as a cushion for costs this calculator doesn't model, like PMI or maintenance.
Home Affordability Calculator FAQs
What DTI ratio should I aim for?
Most lenders prefer a total (back-end) DTI of 43% or less. A front-end ratio of 28-31% is typical. Lower ratios give you more financial cushion.
Does this include PMI?
No. If your down payment is less than 20% of the home price, you will likely need Private Mortgage Insurance (PMI), which adds to your monthly cost. Factor this in separately.
Why are there two different max prices?
The front-end ratio only considers housing costs. The back-end ratio also includes your other debts. The lower of the two is your binding constraint — use the recommended range for a safe estimate.
Should I use gross or net income?
Gross (pre-tax) income is the standard for mortgage qualification. Lenders use your gross income before any deductions.