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Mortgage Affordability Calculator

A mortgage affordability calculator determines the maximum home price and loan amount you can afford based on your income, existing debts, down payment, and debt-to-income (DTI) ratio limits. Instead of guessing or overstretching your budget, this free tool uses lender-approved formulas to calculate your realistic homebuying power. It factors in principal, interest, property taxes (estimated at 1.2% annually), homeowners insurance (0.5% annually), and your existing monthly debt obligations. The calculator shows your maximum home price, monthly payment breakdown, and actual DTI ratio so you can shop confidently within your budget. Ideal for first-time homebuyers, refinancers, or anyone evaluating how income changes affect buying power. All calculations happen instantly in your browser.

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Car loans, credit cards, student loans, etc.

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Most lenders use 43% max DTI

Advanced Settings

US average is ~1.1%. Varies widely by state (0.3% in Hawaii to 2.2% in New Jersey).

Typically 0.3% to 1.0% of home value per year.

Applied when down payment < 20%

Private mortgage insurance, typically 0.3% to 1.5% of loan amount per year.

Homeowner association monthly dues, if applicable.

Max housing-only DTI. Most lenders use 28%. The back-end DTI above includes all debts.

How to Use This Tool

  1. Enter your annual gross income (before taxes and deductions)
  2. Input monthly debt payments including car loans, credit cards, student loans, and other recurring obligations
  3. Specify your down payment amount and adjust interest rate and loan term (15 or 30 years)
  4. Set your max DTI ratio (43% is the standard Qualified Mortgage limit) and click Calculate Affordability to see your maximum home price, loan amount, monthly payment, and budget breakdown

Why This Method?

Mortgage lenders use the debt-to-income ratio as the primary metric to determine how much you can borrow. The formula is (Total Monthly Debts + Housing Payment) / Gross Monthly Income ≤ 43% for most conventional loans. This 43% threshold is the Qualified Mortgage standard set by the Consumer Financial Protection Bureau to ensure borrowers aren't overleveraged. The calculator works backward from your DTI limit to find the maximum housing payment you can afford.

Unlike simple rules of thumb (like 28% of income for housing), this tool accounts for your actual debt load. Someone with no debts could afford a larger mortgage than someone with car loans and credit card bills, even at the same income level. The calculator also estimates property tax and insurance, which many buyers forget when budgeting. These costs can add hundreds per month and significantly reduce the loan amount you qualify for.

The tool uses the standard mortgage payment formula M = P * [r(1+r)^n / ((1+r)^n - 1)] where M is monthly payment, P is principal, r is monthly interest rate, and n is number of payments. By allocating approximately 70% of your max housing payment to principal and interest, and 30% to taxes and insurance, it provides a realistic estimate. Actual affordability varies by lender, credit score, and loan type (FHA, VA, conventional), but this gives you a solid baseline.