Mortgage Affordability Calculator
Calculate how much home you can afford based on your income, existing debts, down payment, and the maximum debt-to-income ratio lenders allow.
Results
Visualization
How It Works
Mortgage affordability is determined by your debt-to-income ratio (DTI) — the percentage of your gross monthly income that goes to debt payments. Lenders typically cap total DTI at 43%, meaning all debts including your new mortgage cannot exceed 43% of gross income. This calculator works backward from that limit to find the maximum home price you can afford.
The Formula
Variables
- Annual Income — Gross (pre-tax) annual income from all sources
- Monthly Debts — Total existing monthly debt payments — car loans, student loans, credit cards, child support
- DTI Limit — Maximum debt-to-income ratio the lender allows — typically 43% for qualified mortgages
- Max Loan — The largest mortgage you can qualify for given your income and debts
- Max Purchase Price — Max loan plus your available down payment
Worked Example
You earn $85,000/year ($7,083/month) and pay $500/month in existing debts. At 43% DTI, your max total debt payment is $7,083 x 0.43 = $3,046. Subtract $500 existing debts = $2,546 max housing payment. At 7.5% for 30 years, that supports a loan of about $364,000. With $80,000 down, max purchase price is approximately $444,000.
Practical Tips
- Just because you qualify for a certain amount does not mean you should borrow it — leave room for savings and emergencies.
- Pay down existing debts before applying to increase your max mortgage amount significantly.
- The 43% DTI is the lender maximum — many financial advisors recommend keeping total DTI under 36%.
- Investment property lenders may use 75% of expected rental income to offset DTI calculations.
- Pre-approval from a lender gives you a precise number and strengthens your offer.
Frequently Asked Questions
What DTI ratio do lenders require?
Most conventional lenders cap total DTI at 43% for qualified mortgages. FHA allows up to 50% in some cases. For investment properties, lenders are stricter and may cap at 36-43%. Lower DTI means easier approval and better rates.
Does rental income count toward my income?
For investment properties, most lenders count 75% of documented rental income (to account for vacancies) when calculating your DTI. You typically need a signed lease or a rent appraisal.
What debts count toward DTI?
Any monthly payment that shows on your credit report: car loans, student loans, credit cards (minimum payment), personal loans, child support, and alimony. Utilities, groceries, and subscriptions do not count.
Should I buy the most expensive house I can afford?
No. The DTI calculation does not account for savings goals, retirement, emergency funds, or lifestyle costs. Most financial experts recommend spending no more than 28% of gross income on housing (the front-end ratio).
How can I afford a more expensive home?
Increase income, pay off debts, save a larger down payment, find a lower interest rate, or extend the loan term to 30 years. Each factor shifts the affordability calculation in your favor.