Mortgage Affordability Calculator

The 28/36 rule — how much house on this income

Before you fall in love with a listing, it's worth knowing the ceiling. This calculator answers "how much house can my income support?" by inverting the standard mortgage math: instead of asking what a $400,000 home costs per month, it asks what home price corresponds to the maximum monthly payment your debt-to-income ratio allows. The result is the price at which a lender stops underwriting — useful for setting a budget, shortlisting neighbourhoods, or sanity-checking what your agent says you "qualify for".

From income to PITI ceiling

• Monthly income is your gross annual divided by 12 — that's what lenders use.
• The DTI rule caps your housing-related spending at a percentage of that monthly income. 28% front-end means PITI alone; 36% back-end means PITI + car loans + student loans + minimum credit-card payments. 43% is the legal ceiling for a "qualified mortgage" in the US after Dodd-Frank.
• PITI stands for principal, interest, taxes, insurance. Your principal & interest payment is solved from the standard amortization formula (P&I = L × r(1+r)ⁿ / ((1+r)ⁿ−1) where L is loan amount, r is monthly rate, n is months). T&I is approximated as a percentage of home value per year — typically 1.0–2.5% in the US depending on state, much lower in most of Europe.
• We solve the home price algebraically: maxPITI = (H − down) × piFactor + H × tiFactor, then re-arrange for H. Loan principal is then maxHome − down payment.

Costs this calculator leaves out

• PMI is not included. If your down payment is under 20%, expect 0.3–1.5% of the loan amount per year in private mortgage insurance. This calculator does not account for it — assume your real max is 5–10% lower than the figure shown when LTV > 80%.
• HOA / condo fees aren't modelled. A condo with $400/month HOA effectively reduces the housing budget by $400 — subtract it from your income inputs by adding $400 to monthly debts, or just mentally adjust.
• Tax/insurance varies wildly by location. 1.5% is a US average. Texas and New Jersey are 2.5%+; California is around 1.1%; most of Europe is well under 1%. Look up your area before relying on this number.
• DTI is a ceiling, not a recommendation. Living right at 36% DTI leaves no buffer for car repairs, kids, or a roof. Many financial planners suggest 25–30% housing including taxes as a comfortable target.
• Lenders also look at credit score, employment history, and reserves. A DTI calculator tells you the maximum a lender would underwrite assuming everything else is fine — it doesn't guarantee approval.
• Variable-rate mortgages need a stress test. If your rate could rise 2 percentage points, recompute at the higher rate and make sure that's still livable.

Where the ceiling misleads

• The "max you qualify for" is rarely "what you should spend". Lenders underwrite to the worst-case version of you — pre-tax income, no other discretionary spending, no kids, no job loss buffer, no holidays. The number this tool produces is closer to that ceiling than to a comfortable monthly. A useful gap to maintain: spend 70-80% of the maximum, not 95%.
• Down-payment size has non-linear effects. Below 20% in the US: PMI eats 0.3-1.5% of loan annually until you reach 78% LTV. Below 10%: jumbo lenders charge higher rates. Below 5%: pool of lenders narrows. The marginal benefit of pushing from 5% to 10% (avoiding higher rate, smaller PMI) is often more cost-effective than pushing 10% to 20% (just removing PMI). Run both scenarios.
• Property tax is a permanent expense; mortgage payment is temporary. Once the loan is paid off, P&I is zero — but T&I keeps rolling forever. In Texas, New Jersey, or Connecticut, the T&I alone on a paid-off home can be $1,000-$2,500/month. Forever. Factor this into retirement planning, especially if "I'll have the house paid off" is part of the budget.
• The "rent vs buy" calculation needs a 5+ year horizon. Closing costs (6-8% of home value, total in/out), maintenance (1-2% of home value annually), and opportunity cost on down-payment capital all eat into the equity-building case. Owning a home for under 5 years usually loses to renting + investing the difference, even in rising markets. Use the rent-vs-buy calculator before committing.
• The 30-year fix is a US-specific quirk. Most of the world's mortgage markets use 15-25 year terms, often with periodic rate resets (UK 2-5 year fixes, German 10-year fixes, Australian and Canadian renewable terms). If you're in a market where 30-year fixes don't exist, this tool's outputs still hold but your refinancing frequency will be higher and your rate-environment exposure greater.

Pairs with

• loan-calculator — once you pick a target price, switch over to see the full month-by-month amortization, total interest, and "what if I pay extra" scenarios.
• percentage-calculator — for quick sanity checks on down-payment percentages, fee splits, etc.

$80k income, $40k down, 6.5% — what does the ceiling look like?

Gross income $80,000/year is $6,667/month. A 28% front-end DTI rule caps housing spend (principal, interest, tax, insurance) at about $1,867/month. With $40,000 down at 6.5% over 30 years and taxes+insurance of 1.5%, that payment ceiling supports a home price of roughly $280,000 — a loan near $240,000. Notice the lever: raise the down payment or the term, or drop the rate, and that ceiling moves more than most people expect.

Front-end, back-end, PMI, and HOA — quick answers

Front-end vs back-end DTI — which applies to me? Front-end (28%) counts only housing costs. Back-end (36–43%) adds car loans, student loans and minimum card payments. If you carry other debt, the back-end rule is the one that will actually gate your approval.

Does this include PMI? No. Put down under 20% and expect private mortgage insurance of roughly 0.3–1.5% of the loan per year — treat your real ceiling as 5–10% lower than shown while your loan-to-value is above 80%.

The bank pre-approved me for more than this. Who's right? Both — lenders approve to the legal maximum, not to what leaves you comfortable. This figure is an affordability sanity-check, not a target to spend up to.

Are HOA or condo fees counted? No. A $400/month HOA effectively lowers your housing budget by $400 — subtract it from your income before reading the result.

Inverting the amortization formula

The calculation runs the classic 28/36 DTI rule in reverse. The front-end test caps housing costs — principal, interest, tax, insurance — at 28% of gross monthly income; the back-end test caps all debt (housing plus car, student and card minimums) at 36%. Whichever ceiling is lower becomes your maximum monthly housing payment. That payment is then run back through the amortization formula at your rate and term to solve for the loan you can support, and your down payment is added to reach a purchase price. Change any single input — rate, term, down payment, existing debts — and the ceiling moves, often more than people expect, because it propagates through the whole inversion.

Pre-approval is not a budget

Treating the bank's pre-approval as a budget. Lenders approve to the legal maximum, not to what leaves you solvent after childcare, savings and a repair fund. Two costs also silently shrink the real ceiling: PMI (roughly 0.3–1.5% of the loan per year while your loan-to-value is above 80%) and any HOA or condo fee, which is not in the 28% housing figure and should be subtracted from income before you read the result.

Related

Once you have a target price, the loan calculator gives the exact payment and schedule, and the rent vs buy calculator checks whether buying even wins for your time horizon. If you already own, the refi comparison is the next stop. See also our guide on when ownership stops winning.

Income-to-ceiling reference

The two DTI ceilings are just fractions of your gross monthly income, so you can read them off directly before touching a single loan input. The gap between the 28% and 36% columns is the room the rule leaves for your other debts — car, student, cards. If those already fill it, the back-end column is the one your lender will actually enforce.

Gross income / yr	Gross / month	28% front-end (housing)	36% back-end (all debt)
$50,000	$4,167	$1,167/mo	$1,500/mo
$75,000	$6,250	$1,750/mo	$2,250/mo
$100,000	$8,333	$2,333/mo	$3,000/mo
$150,000	$12,500	$3,500/mo	$4,500/mo
$200,000	$16,667	$4,667/mo	$6,000/mo

The monthly figures are exact (income ÷ 12, then × 0.28 / 0.36). The home price those payments support is what the calculator solves — it depends on your rate, term, down payment and local tax rate, which is why it is not a fixed column here.