How to use the us mortgage affordability calculator
- Enter your gross (pre-tax) annual household income and your current monthly debt payments such as car loans, student loans and minimum card payments.
- Enter the cash you plan to put down and the interest rate and term from a lender quote.
- Enter your own estimates for property tax (as a % of the home value), insurance and any HOA dues.
- Set the debt-to-income limits. 28% front-end and 36% back-end are a common starting point; lenders and loan programs use different limits.
- Read the maximum home price, the payment it implies and which ratio is the limiting factor.
Worked example
$120,000 income, $500 monthly debts, $60,000 down, 6.5% for 30 years
Gross monthly income is $10,000. The 28% front-end limit allows $2,800 for housing; the 36% back-end limit allows $3,600 minus $500 of debts, or $3,100. The front-end ratio is the constraint. With 1.1% property tax, $1,500 a year insurance and 0.5% PMI (the down payment is under 20%), the maximum price is $402,300: a $342,300 loan with principal and interest of $2,163.57, property tax $368.78, insurance $125.00 and PMI $142.63, a total of $2,799.97 per month. The back-end ratio at that price is 33%.
How it works
The maximum housing payment is the lower of (gross monthly income × front-end %) and (gross monthly income × back-end % − monthly debts). Because total housing cost rises with price (principal and interest, property tax, and PMI when the down payment is under 20%), the calculator searches for the highest price whose cost fits that budget, using a numeric bisection accurate to the dollar and rounded down to the nearest $100. Principal and interest use the standard fixed-rate formula M = P × r / (1 − (1 + r)−n).
Assumptions
- Debt-to-income limits are yours to set. No lender approval rule is implied.
- Property tax rate, insurance, HOA and PMI rate are your own estimates.
- PMI applies whenever the down payment is under 20% of the price and is charged as an annual % of the loan amount.
- Closing costs and cash reserves are not deducted from your down payment.
Frequently asked questions
What is the 28/36 rule?
A traditional guideline suggesting housing costs stay under 28% of gross monthly income and total debt payments under 36%. Many loan programs allow higher ratios, and your own comfort level may be lower.
Is this a pre-approval?
No. Lenders also look at credit history, employment, assets and program rules. Use this as a planning estimate before talking to a lender.
Why does my down payment change the result so much?
A larger down payment reduces the loan amount and can remove PMI, both of which lower the monthly cost at any price.
What counts as monthly debts?
Minimum required payments on car loans, student loans, credit cards, personal loans, child support and similar obligations. Do not include rent you will stop paying, utilities or groceries.
Limitations
- Does not consider credit score, reserves, or loan program limits such as FHA or conforming loan caps.
- Uses gross income; your take-home pay and other goals matter too.
- Holds tax, insurance and rates constant.