Enter your income, debts, and down payment to find your max home price, monthly PITI, and which limit is capping your budget.
Use this free mortgage affordability calculator to apply the 28/36 DTI rule — or any DTI cap you choose — to your real numbers. Instantly see your maximum and recommended home price, a full PITI breakdown, and the binding constraint (front-end DTI, back-end DTI, or down payment).
Direct answers to the most common questions, in plain language. Skim if you're in a hurry; dig deeper below.
Roughly $320,000–$380,000 at 7% with standard DTI rules.
On a $120,000 gross salary, the 28% front-end rule caps your total housing payment (PITI) at about $2,800/mo. At a 7% rate on a 30-year loan, that PITI supports a home price of roughly $330,000–$380,000 depending on your property tax rate, insurance, and how much you put down. Lower existing debts push the number higher; higher existing debts pull it down via the 36% back-end cap.
Housing ≤ 28% of gross income. All debts ≤ 36%.
The 28/36 rule is the most widely used lender guideline. Your monthly housing payment (principal, interest, taxes, insurance — PITI) should not exceed 28% of your gross monthly income. All monthly debt payments combined — housing plus car loans, student loans, credit card minimums — should not exceed 36%. Lenders may approve loans outside these limits, but these ratios define the comfortable zone most financial planners recommend.
Yes — a larger down payment lowers your loan, cutting PI and potentially pushing you into a higher price tier.
A larger down payment reduces the loan amount, which directly lowers your principal and interest payment. That gives you more room under the front-end DTI cap to afford a pricier home. It also eliminates PMI (private mortgage insurance) if you hit 20% down, saving $50–$200/mo. The savings from PMI removal alone can add $10,000–$20,000 to your max affordable price.
Every 1% rate increase reduces buying power by roughly 8–10%.
When rates rise, the monthly payment on the same loan amount increases, which means you can afford less house for the same PITI budget. At 6%, a $400,000 house carries a P&I of about $2,400/mo. At 7%, that same P&I buys roughly $360,000 — a 10% drop in purchasing power. This is the single biggest lever in the affordability calculation, which is why timing a purchase around rates matters enormously.
The mechanics in short answers — no jargon, no upsell.
Lenders multiply your gross monthly income by the front-end ratio (typically 28%) to get the maximum PITI — principal, interest, property tax, and insurance — they'll approve. The calculator binary-searches for the home price where your PITI equals exactly that cap.
The back-end ratio (typically 36%) applies to all monthly debt obligations: your new PITI plus existing car loans, student loans, and credit card minimums. The back-end cap gives a second, often lower price ceiling. The binding constraint is whichever cap is hit first.
Loan amount = home price minus down payment. A larger down payment directly reduces the P&I component of PITI, which lets you afford more home within the same DTI budget. Below 20% down, lenders typically add PMI — factor that in too.
At a 1.1% tax rate, a $400,000 home adds $367/mo in property tax alone — nearly $4,400/yr. Combined with insurance, these fixed costs can consume 10–15% of your monthly PITI budget before a dollar of principal is repaid.
Designed so anyone can model their situation in under a minute, with or without a finance background.
See both the maximum you can qualify for and a more conservative recommended price — so you negotiate with full information.
Whether it's front-end DTI, back-end DTI, or down payment cash, the calculator tells you which limit is actually capping you — and how to change it.
Separate out principal & interest, property taxes, insurance, and HOA so you understand the real all-in monthly cost, not just the teaser P&I.
Change the front-end and back-end caps to model lender-specific guidelines, VA loan rules (41% back-end), or FHA limits.
See how your max home price scales across a range of incomes — helpful when planning for a raise, second income, or co-borrower.
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Everything you might ask before, during, or after using this tool.
DTI stands for debt-to-income ratio. It measures your monthly debt obligations as a percentage of your gross (pre-tax) monthly income. Lenders use DTI because it is the single most predictive metric for default risk — borrowers with high DTIs are statistically more likely to fall behind on payments when income disruptions occur. The two DTI thresholds are: front-end (housing costs only) and back-end (all debts). Conventional lenders typically cap these at 28% and 36%, though FHA loans allow up to 31%/43% and VA loans use a 41% back-end cap.
Borrowing your maximum DTI-allowed amount leaves very little financial buffer. Most financial planners recommend targeting a home price 10–20% below your calculated maximum. Reasons: property taxes and insurance tend to rise over time, unexpected maintenance costs average 1–2% of home value per year, and life events (job change, medical expenses, kids) can squeeze a tight budget. The calculator's "recommended price" uses a more conservative 25%/33% DTI target to reflect this buffer.
The affordability calculator does not include PMI in its DTI calculation, which means it slightly overstates your buying power if you're putting less than 20% down. PMI typically costs 0.5–1.0% of the loan per year, or $80–$170/mo on a $200,000 loan. To account for this, either manually reduce your front-end DTI by 1–2 percentage points when using less than 20% down, or use the mortgage calculator (link below) to see the full PMI-inclusive payment.
The 35/45 rule is a more permissive guideline used by some lenders and financial advisors: up to 35% of gross income on housing (front-end) and up to 45% of gross income on all debts (back-end). You can test this scenario by setting the front-end cap to 35% and back-end cap to 45% in the calculator. Note that VA loans often use a 41% back-end cap with no formal front-end limit, and FHA loans use 31%/43%.
Enter gross annual income — the amount before taxes, retirement contributions, and health insurance. This is what lenders use when calculating DTI. If you are self-employed, use net income reported on Schedule C or Line 5 of your tax return, averaged over two years. Do not include bonuses or commission unless they've been consistent for two or more years and can be documented.
Include all minimum monthly payments that appear on your credit report: auto loans, student loans (even in deferment — lenders use 1% of balance or the fully amortized payment), personal loans, and minimum credit card payments. Do not include utilities, groceries, phone bills, subscriptions, or insurance payments. Child support and alimony are included if they are court-ordered obligations.
Yes, and meaningfully so. A lender pre-approval factors in your actual credit score, your full credit report (including all obligations), debt documentation, and the lender's own risk appetite — which may be more or less conservative than the standard 28/36 rules. Use this calculator to understand your range before you apply, not as a guarantee of what a lender will offer. Pre-approval letters are typically valid for 60–90 days.
Property tax rates range from 0.3% (Hawaii) to over 2.4% (New Jersey and Illinois) of assessed home value annually. The national average is around 1.1%. A 1% difference in tax rate changes your PITI by $333/mo on a $400,000 home — enough to shift your maximum affordable price by $30,000–$50,000. Always look up the county's effective tax rate for the specific area you're targeting.
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The 28/36 rule originated with Fannie Mae and Freddie Mac guidelines that set the standards for conventional conforming loans in the US. Lenders who want to sell loans on the secondary market must document that borrowers meet these thresholds — which is why the 28/36 limit is so ubiquitous. It is not a law, and it is not the only guideline, but it is by far the most common starting point.
Where it breaks down: The rule treats all income as equally stable, but a $120,000 salary from a tenured government job and $120,000 from freelance consulting carry very different risk profiles. Similarly, a borrower with $0 in savings and a 28%-DTI mortgage is far more vulnerable than one with 18 months of expenses in the bank at the same DTI. The rule is a floor for lender qualification, not a ceiling on sound financial planning.
The relationship between mortgage rates and buying power is nonlinear and more dramatic than most buyers expect. At 5%, a $2,500/mo P&I payment supports a loan of about $466,000. At 7%, that same $2,500/mo supports only $376,000 — a drop of $90,000 in buying power from a 2-point rate move. At 8%, the same payment buys $341,000.
For buyers in 2026, the practical implication is that rates near 7% compress the entry-level market significantly compared to the 3–4% era of 2020–2021. Waiting for rates to fall is a reasonable strategy, but it comes with opportunity cost — home prices may rise further, and the "perfect rate" may never arrive. The better question is whether the monthly PITI is sustainable on your current income, not whether the rate is historically low.
A 20% down payment eliminates PMI, which saves $80–$200/month on a typical loan. It also reduces the loan amount, lowering P&I and improving your DTI ratios. But tying up more cash in equity means less liquidity for emergencies, investments, or home repairs — and equity has near-zero return until you sell or refinance.
Putting 3–5% down (FHA minimum is 3.5%) lets you buy sooner and preserve cash, at the cost of PMI and a higher monthly payment. If you are in a rising market and delayed purchase costs you appreciation, the PMI premium may be worth paying. The right answer depends on your local market, your emergency fund, and your rate of return on other investments.
First-time buyers routinely underestimate the costs beyond the mortgage payment. Property taxes and insurance are captured in PITI, but maintenance is not. The commonly cited rule of thumb is 1% of home value per year in maintenance — on a $400,000 home, that is $4,000/yr, or $333/mo. In practice, this varies widely with the age of the home, climate, and your willingness to do work yourself.
Closing costs at purchase typically run 2–5% of the purchase price. Moving costs, immediate repairs, furniture, and appliances can add another $5,000–$20,000. Budget for all of this before committing to a price — the calculator shows what you can qualify for, not what you can comfortably afford after all the first-year costs.
This calculator applies textbook DTI rules — it does not model credit scores, loan-to-value constraints, self-employment documentation requirements, or lender overlays (additional restrictions that individual lenders impose on top of Fannie/Freddie guidelines). A borrower with a 620 credit score and a 28% DTI may be declined or offered a significantly higher rate than a borrower with a 780 score at the same DTI.
Use this tool to understand your ballpark and prepare financially. Before making offers on homes, get a formal pre-approval letter from at least two lenders. Pre-approval requires income documentation (W-2s, tax returns, recent pay stubs), bank statements for down payment verification, and a hard credit pull. The lender's pre-approval letter, not this calculator, is what a seller will accept.
Two short notes worth reading before you trust any number on this page.
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We are not a bank, NBFC, advisor, broker, or distributor of any financial product. The numbers shown here are estimates for educational purposes only, based on the inputs you provide.
Results are not financial, legal, or tax advice. Please consult a qualified professional before any decision about your loan, investments, or personal finances. Actual loan terms and charges depend on your bank and individual circumstances.
