Home Affordability Calculator
Calculate your home buying power. Find out exactly how much home purchase price you can qualify for based on debt-to-income limits.
Financial Profile
Recommended Home Purchase
Budget Comfort Ranges
Different affordability tiers based on risk tolerances and DTI allocations.
| Tier | DTI Allocation Limit | Housing Cost Limit | Max Home Price | Monthly Payment (PITI) |
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How Lenders Determine Your Affordability
Lenders do not evaluate affordability by looking at what you have left over at the end of the month. Instead, they run your numbers through fixed ratios compared to your monthly gross (pre-tax) income.
The Debt-To-Income (DTI) Ratios
- Front-End DTI Ratio: The percentage of gross monthly income spent on housing expenses. Housing expenses include principal, interest, property taxes, homeowners insurance, and HOA fees. Typically capped at 28%.
- Back-End DTI Ratio: The percentage of gross monthly income spent on housing expenses PLUS all recurring debts (credit cards, loans, child support). Typically capped at 36% for conventional loans, though some loan programs allow up to 43% or 50% with compensating factors.
Understanding the Math
To find your housing budget using the 28/36 rule:
- Multiply monthly gross income by 0.28 (Front-end limit).
- Multiply monthly gross income by 0.36 and subtract monthly debts (Back-end limit).
- The lower of these two figures is your maximum monthly housing budget (PITI limit).
- We back-calculate the loan size that corresponds to this PITI budget, then add your down payment to find your maximum purchase price.
Frequently Asked Questions
What is the 28/36 rule for home affordability?
The 28/36 rule is a standard rule of thumb used by mortgage lenders. It states that a household should spend a maximum of 28% of its gross monthly income on housing expenses (PITI) and a maximum of 36% on total debt service (housing costs + auto loans, credit cards, student loans, etc.).
How can I increase my home affordability budget?
You can increase your home buying power by paying down existing high-interest debts (to lower your back-end DTI), saving a larger down payment, improving your credit score to secure a lower interest rate, or increasing your household income.
What is included in monthly debt obligations?
Monthly debt obligations include recurring payments like car loans, student loans, minimum credit card payments, personal loans, and child support. It does not include standard living expenses like utilities, groceries, gas, or subscription services.