House Affordability Calculator

The 28/36 rule is a widely-used lender guideline that caps your total housing payment (principal, interest, taxes, and insurance — PITI) at 28% of your gross monthly income (the front-end ratio), and caps your total monthly debt including housing at 36% of gross monthly income (the back-end or DTI ratio). Both limits are checked simultaneously; the smaller of the two determines your binding ceiling. These percentages are defaults you can adjust in the calculator for FHA (31/43), VA (back-end 41%), or any custom limits your lender quotes.

PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a complete monthly mortgage payment. Principal and interest (P&I) are the amortizing portions that pay down the loan. Property taxes are collected monthly and held in escrow by the lender. Homeowners insurance is also escrowed. Lenders include all four (plus any HOA fees and PMI) when computing your housing-to-income ratio, which is why this calculator subtracts them before back-solving for the loan amount you can afford.

It works in three steps. First, it applies the front-end and back-end DTI ratios to your gross monthly income and takes the smaller ceiling. Second, it subtracts the monthly property tax, homeowners insurance, HOA fees, and PMI from that ceiling to find the maximum principal-and-interest (P&I) budget. Third, it reverse-solves the standard fixed-rate amortization formula to find the loan amount that exactly consumes that P&I budget, then adds your down payment for the total affordable home price.

The front-end DTI (housing ratio) compares only your monthly housing payment to gross income. The back-end DTI (total debt ratio) compares all monthly debts — housing plus car loans, student loans, credit-card minimums, and other obligations — to gross income. Lenders check both; if your non-housing debts are large, the back-end limit will bind first and reduce your affordable home price more than the front-end limit alone would.

Private mortgage insurance (PMI) is typically required on conventional loans when the down payment is less than 20% of the home price, meaning the loan-to-value (LTV) ratio exceeds 80%. PMI premiums generally run 0.5%–1% of the loan amount per year (roughly 0.5%/12 per month). Because the home price is the output rather than an input here, enter your best estimate of the monthly PMI you expect — for instance, $100–$200/month for a moderate-priced home — and adjust as you narrow your target price.

No. This is an affordability estimate based on income and debt ratios, not a mortgage pre-approval. Actual loan approval depends on your credit score, credit history, asset reserves, employment history, the specific loan program, and individual lender overlays. Many lenders use automated underwriting systems that weigh dozens of factors beyond a single DTI ratio. Use this result as a planning starting point, then consult a licensed mortgage professional for a formal pre-approval.

There is no single legal maximum DTI for all mortgages. The CFPB removed its 43% General QM hard cap effective 1 July 2021, replacing it with a price-based (APR vs APOR) standard. In practice, Fannie Mae's Desktop Underwriter system may approve up to 45–50% DTI with strong compensating factors. FHA guidelines use a 43% back-end ratio as a general threshold, with compensating factors allowing higher. Conventional lenders often apply a 36%–45% range. The 28/36 defaults in this calculator are conservative conventional targets.

FHA guidelines traditionally use a 31% front-end ratio and 43% back-end ratio. Simply set the front-end DTI field to 31 and the back-end DTI field to 43 in the calculator. Note that FHA loans require a mortgage insurance premium (MIP) rather than PMI — enter your expected monthly MIP in the PMI field. FHA also allows as little as 3.5% down for borrowers with credit scores of 580 or higher, so you can enter a smaller down payment to model that scenario.

The calculator focuses on the recurring monthly housing payment within DTI limits. It does not include closing costs (typically 2%–5% of the loan amount), moving expenses, home inspection fees, immediate repair or renovation needs, ongoing maintenance costs (typically 1%–2% of home value per year), utilities, or lifestyle budget adjustments from homeownership. Plan for these separately before setting your budget.

A larger down payment reduces the loan principal required for a given home price. But this calculator works in reverse: it first finds the maximum loan amount your P&I budget supports, then adds the down payment to get the total purchase price. So increasing the down payment directly lifts the ceiling — every additional dollar of down payment is a dollar more in affordable home price, holding the loan amount constant. It also reduces or eliminates PMI when the down payment reaches 20% of the home price.

The Home Loan Eligibility Calculator uses the Indian FOIR (Fixed Obligation to Income Ratio) framework applied to net take-home income, solves for the maximum loan amount a bank will sanction, and optionally applies an LTV cap. This House Affordability Calculator uses the US 28/36 DTI framework applied to gross pre-tax income, accounts for the full PITI housing payment (taxes, insurance, HOA, PMI), and outputs the maximum home price you can afford (loan + down payment). The two tools serve different markets and regulatory frameworks.

A back-end DTI below 36% is generally considered a strong position for a conventional mortgage — it is the manual-underwriting ceiling Fannie Mae publishes and the back-end limit in the classic 28/36 rule. A DTI between 36% and 43% is typically still approvable with good credit and reserves; Fannie Mae's automated system (Desktop Underwriter) may accept up to 45–50% with compensating factors. Above 50%, most conventional lenders will decline, though some government-backed programs (VA, USDA) and portfolio lenders have their own thresholds. The lower your DTI, the more flexibility you have on rate, loan size, and program choice — and the more buffer you retain if interest rates rise or income dips.