A mortgage affordability calculator answers the question lenders ask first: how much house can you afford given your income and existing debts? The math runs the debt-to-income (DTI) ratio backwards, cap the total monthly debt at a percentage of gross income, subtract your existing debts, and what's left is the maximum mortgage payment you can support. Invert the amortization formula and that ceiling becomes a maximum loan amount; add the down payment for max purchase price.
For a payment-to-loan calculation (you pick the price), use the Mortgage Calculator; this page goes the other direction, your finances pick the price. The key difference is what's held fixed: there, the loan amount; here, the maximum monthly payment your income safely supports.
Key takeaway
The DTI cap is the binding constraint, not the down payment. Most homebuyers are bottlenecked by the monthly payment a lender will underwrite given their income, not by the cash they have on hand for the down payment. Reducing existing monthly debts (paying off a car loan, consolidating credit cards) can raise your affordable purchase price by $30,000–$50,000 more than the same dollars saved as additional down payment.
How it's calculated
The math chains three steps:
- Max monthly payment from DTI:
M_max = (income/12) × DTI − existing_debts - Max loan amount by inverting the amortization formula:
P_max = M_max × [(1+r)^n − 1] / [r × (1+r)^n]where r is the monthly rate (annual ÷ 1200) and n is the term in months (years × 12). - Max purchase price = max loan + down payment.
The 36% DTI default is the conservative Fannie/Freddie threshold; many lenders go up to 43%, and FHA/VA can go higher. Higher DTI = higher affordable price, but also tighter monthly cash flow. The output is principal-and-interest only, your real monthly housing cost will include property taxes, insurance, and PMI on top, which can add 25–40% to the figure.
Source: DTI-constrained max payment, inverted through the standard amortization formula
Examples
$80K income, $500/mo debts, $30K down, 6.5%/30 yr, 36% DTI
- Gross annual income $80,000
- Other monthly debts $500
- Down payment $30,000
- Mortgage rate 6.5%
- Loan term 30 yr
- Max DTI ratio 36%
On an $80,000 income with $500/month of existing debt, the conservative 36% DTI cap allows a max monthly P&I payment of $1,900, which at 6.5%/30 yr supports a max loan of about $300,600. Add the $30,000 down payment and the affordable purchase price is around $330,600. Note: this is before property taxes and insurance, which on a $330K home in many US markets add $400–$700/month and would push real PITI over a comfortable threshold for this income.
$120K income, $300/mo debts, $60K down, 6.0%/30 yr, 36% DTI
- Gross annual income $120,000
- Other monthly debts $300
- Down payment $60,000
- Mortgage rate 6%
- Loan term 30 yr
- Max DTI ratio 36%
At $120K income, the 36% DTI math gives a max monthly P&I of $3,300 (after $300/month of existing debt). At 6.0%/30 yr that supports a max loan of roughly $550,400; add $60K down and affordable purchase price is around $610,400. The income difference between the two examples is 1.5×, but affordable price nearly doubles, DTI compounds cleanly when existing debts are low and rates are reasonable.
Frequently asked questions
What's a debt-to-income (DTI) ratio and why does it cap affordability?
DTI is the percentage of your gross monthly income that goes to recurring debt payments, including the prospective mortgage, plus car loans, student loans, credit-card minimums, child support, and similar obligations. Lenders cap DTI because it's the cleanest predictor of payment risk: borrowers with DTI under 36% rarely default; those above 50% default at materially higher rates. The cap is what underwriting actually checks; income and credit score determine which DTI cap they'll allow you (36%, 43%, or higher with compensating factors).
Should I use 36%, 43%, or my lender's max DTI in this calculator?
36% is conservative and matches the traditional "back-end" DTI guideline that leaves comfortable cash flow for everything else (food, utilities, savings, lifestyle). 43% is the Qualified Mortgage cap, most conventional lenders' upper limit without compensating factors. 45–50% can be allowed with large reserves, excellent credit, or stable employment history. Plug in your lender's quoted DTI to see the maximum they'll approve; plug in 36% to see the price that leaves real breathing room.
Does this include property taxes, insurance, and PMI?
No, the max monthly payment is principal-and-interest only. Real PITI (P&I + taxes + insurance + PMI/HOA) is typically 25–40% higher than the P&I figure shown here, depending on location and down payment. Lenders evaluate against full PITI, not P&I, so the actual approved price is lower than this calculator suggests once those line items are added. Use this as the upper bound, then subtract for taxes/insurance to get a realistic comfortable price.
How can I increase how much house I can afford?
Three levers: (1) raise income, bonuses, second job, or co-borrower; (2) reduce monthly debts, paying off a car loan can free $400/month of DTI space, worth ~$60K of affordable price at typical rates; (3) longer term or lower rate, going from 6.5% to 5.5% or from 30 → 40 yr stretches affordability ~10–15%. Increasing the down payment helps only if your DTI cap isn't binding; if it is, more down payment leaves the affordable price unchanged.
How is this different from a standard mortgage calculator?
A mortgage calculator takes a known loan amount as input and outputs the monthly payment. This calculator runs the math the other direction, it takes your income and DTI as the constraint, computes the maximum monthly payment that fits under the DTI cap, then inverts the amortization formula to find the largest loan (and hence purchase price) that payment supports. Use the mortgage calculator when you've already picked a price; use this one to figure out what price to pick.