Mortgage Affordability Calculator
Estimate the home price you can afford from your income, debts and down payment, using standard housing and debt-to-income ratios.
This is a planning estimate, not a lending decision. Lenders set their own limits. See our Disclaimer.
The formula
Two limits are applied. The housing limit is the maximum share of gross monthly income for the housing payment (28% by default). The debt limit is the maximum share for all debt payments (36% by default) minus your existing debts. The smaller of the two is your monthly housing budget.
The loan is then the amount whose monthly payment, plus property tax and insurance on the home price, fits that budget: loan = (budget − down payment × t) ÷ (payment factor + t), where t is tax and insurance as a monthly fraction of price. The home price is the loan plus the down payment.
Worked example
Income 60,000 a year, 400 of other monthly debts, down payment 20,000, 6% for 30 years, no tax or insurance. Monthly income is 5,000. The housing limit is 28% = 1,400 and the debt limit is 36% − 400 = 1,400, so the budget is 1,400. At 6% over 30 years each 1 of loan costs 0.0059955 a month, so the loan is 1,400 ÷ 0.0059955 = 233,508 and the home price is about 253,508.
Limitations
The 28% and 36% ratios are common rules of thumb; lenders differ and may allow more. The estimate ignores mortgage insurance, HOA fees, closing costs and your credit profile.
How the inputs change the answer
Same starting point as above (income 60,000, down payment 20,000, 6%, 30 years, debts 400): home price 253,508.26. Adding property tax and insurance at 1.2% of the price a year cuts it to 217,269.53, with a budget of 1,400 split into 1,182.73 for the loan payment and 217.27 for taxes and insurance.
Existing debts come straight off the budget. With 1,000 of monthly debts the debt limit falls to 36% − 1,000 = 800, so the home price is 153,433.29. With 1,400 of debts the budget is only 400 and the price drops to 86,716.65.
A shorter loan lowers the price: the same income on a 15-year loan allows 185,904.92. A bigger down payment adds directly to the price: 50,000 instead of 20,000 gives 283,508.26 with the same 233,508.26 loan.
Changing the ratios
Both ratios can be edited. With income 90,000, debts 300, down payment 30,000, 6.5% over 30 years, tax and insurance 1.2%, and ratios of 28 and 43, the budget is 2,100 and the price is 312,760.61. The tool picks whichever limit is lower, and a 0% rate is accepted: with no tax or insurance entered, the loan is simply the budget times the number of months (1,400 × 360 = 504,000 for the first example's budget and term).
When the tool shows an error
- If existing debts use up the whole debt limit, you see "Your existing debts leave no room for a housing payment at this ratio."
- If tax and insurance on the down payment alone exceed the budget, you see "Taxes and insurance on the down payment already use up the budget."
- Income, rate and loan term must be filled in. Income, term and both ratios must be above zero.
Guide
- How Lenders Size a Mortgage: DTI, Rate, Term — How debt-to-income limits turn your income into a maximum payment, and how rate, term, existing debts and down payment change the loan you can get.
Frequently asked questions
What is the 28/36 rule?
A guideline that housing costs should be at most 28% of gross monthly income and total debt payments at most 36%. You can change both ratios above.
Does a bigger down payment raise the price I can afford?
Yes. It reduces the loan you need, so the same monthly budget supports a higher home price.
Is this the same as a loan affordability calculator?
It is related, but this one is specific to buying a home: it adds a down payment, property tax and insurance, and shows a home price rather than only a loan amount.
Why does the answer drop so much when I add property tax?
Part of the monthly budget is reserved for tax and insurance on the whole home price, so less is left for the loan. At 1.2% a year in the example, the home price falls from 253,508.26 to 217,269.53.
Does my current rent count as a debt?
No. Enter only debts you will keep paying after the purchase, such as car, card or student loan payments. Rent stops when you buy, so leave it out.
What is the difference between the two limits?
The housing limit caps the home payment. The debt limit caps the home payment plus your other debts. The tool uses the lower budget, which is usually the debt limit when you have large existing payments.