Mortgage Affordability Calculator
Lenders decide what you can borrow using two ratios. This calculator applies the same ones to your income, debts and down payment, and shows the price they point to.
Your finances
Lenders work from gross income — the figure before tax and deductions.
Income and debts
Cards, auto loans and student loans — not rent or utilities.
Loan terms
Ownership costs
Annual tax as a share of the home's value. The US average is about 1.1%.
How this number was reached
Your budget is capped by the housing ratio — housing costs at 28% of gross income. With $120,000 of gross income, that allows $2,800.00 a month for housing. Subtracting insurance, HOA and the property tax on a home of this value leaves $2,266.32 for principal and interest, which at 6.50% over 30 years supports a loan of $358,557.What this assumes
- Housing costs capped at 28% of gross income and total debts at 36%.
- Mortgage insurance, closing costs and maintenance are excluded from the monthly figure.
- Lenders also weigh credit score, employment history and cash reserves, none of which appear here.
- This is a ceiling, not a recommendation. Budget from take-home pay before committing.
Estimated maximum home price
$418,557
With $60,000 down, that is a loan of $358,557.
Monthly payment at that price
- Principal & interest
- $2,266.32
- Property tax
- $383.68
- Home insurance
- $150.00
- HOA fee
- $0.00
- Total monthly payment
- $2,800.00
How it compares to your income
- Housing ratioLimit 28%
- 28.0%
- Total debt ratioLimit 36%
- 32.5%
- Down payment shareBelow 20% — expect mortgage insurance
- 14.3%
How lenders decide what you can borrow
Underwriting comes down to two debt-to-income ratios. The front-end ratio asks what share of your gross monthly income the housing payment consumes. The back-end ratio asks the same question about every debt payment you make — housing plus cards, car loans and student loans.
The conventional benchmark is 28/36: housing at or under 28% of gross income, total debt at or under 36%. Whichever limit binds first sets your budget. Someone with a $600 car payment is limited by the back-end ratio long before the front-end one becomes relevant.
Government-backed programs are looser. FHA loans routinely approve back-end ratios above 43%, and automated underwriting can stretch further with strong compensating factors like a large down payment or substantial reserves. Being approved for that much and being comfortable at that much are different questions.
How the maximum price is worked out
Property tax is charged on the home’s value, so it grows with the price you are solving for. That makes the calculation circular unless you rearrange it. Writing the housing budget out in full:
budget = (price − down payment) × k + price × t ÷ 12 + insurance ÷ 12 + HOA
where k is the monthly payment per dollar borrowed and t the annual property tax rate. Solving for price gives an exact answer in one step:
price = (budget − insurance ÷ 12 − HOA + down payment × k) ÷ (k + t ÷ 12)
This is why the total monthly payment shown always lands precisely on your housing budget rather than near it.
What the number leaves out
A maximum price is a ceiling, not a recommendation, and the ceiling ignores several real costs of owning.
- Maintenance
- Budget roughly 1% of the home’s value a year. On a $400,000 house that is about $333 a month that no lender counts.
- Closing costs
- Typically 2%–5% of the purchase price, paid up front and separate from your down payment.
- Mortgage insurance
- Required below 20% down and not reflected in the payment shown here.
- Utilities and commuting
- Often materially higher than in a rental, and rarely factored into the decision.
- Your other goals
- Retirement contributions and an emergency fund do not appear in any DTI ratio, but they compete for the same money.
Frequently asked questions
The 28/36 rule is the conventional debt-to-income guideline used in mortgage underwriting. It says your total monthly housing cost — principal, interest, taxes, insurance and HOA — should not exceed 28% of gross monthly income, and all your monthly debt payments together should not exceed 36%. On a $120,000 salary that works out to about $2,800 for housing and $3,600 for all debt combined.
Yes, roughly dollar for dollar plus a little more. Every extra dollar down is a dollar less borrowed, so it raises the price you can reach by at least that amount. It also frees a small part of your monthly budget from interest, which buys slightly more house on top. Crossing 20% removes mortgage insurance, which frees up more of the monthly budget again.
Significantly. Student loan payments count towards your back-end ratio exactly like any other debt. A $400 monthly student loan payment reduces your housing budget by $400 once the back-end ratio is the binding constraint — which, at typical incomes, is roughly $60,000–$70,000 of purchasing power at current rates.
Usually not. Underwriting ratios are built on gross income and ignore taxes, retirement contributions, childcare, maintenance and savings goals. Many buyers find a payment near the top of their approval leaves them technically qualified and practically stretched. Treat the maximum as the edge of the range, then decide separately where inside it you want to sit.
Pre-qualification tools often use looser ratios, exclude HOA fees, or assume a lower property tax rate than your target area actually charges. This calculator applies the conventional 28/36 limits and includes taxes, insurance and HOA in the housing payment, which produces a more conservative and more realistic number.