Home Affordability Calculator
Lenders don’t approve you for a mortgage based on what you’d like to spend — they use debt-to-income (DTI) ratios that cap your total housing payment relative to your income, and cap your combined debt payments relative to your income. This calculator applies the same two limits lenders typically use (a 28% front-end ratio for housing alone, and a 36% back-end ratio for all debts combined) to estimate the maximum home price you could realistically afford, factoring in your down payment, existing monthly debts, and the full cost of ownership — not just principal and interest.
How Lenders Actually Set Your Limit
Most conventional lenders apply two ratios at once: your total housing payment (principal, interest, taxes, insurance, and HOA) generally shouldn't exceed about 28% of your gross monthly income, and your total debt payments — housing plus car loans, student loans, credit cards, and anything else that shows on your credit report — generally shouldn't exceed about 36%. This calculator finds the home price where your estimated monthly housing payment lands right at whichever of those two limits is more restrictive for your situation, which is exactly how automated underwriting tends to work in practice.
Why Existing Debt Hurts More Than It Seems
Because the back-end ratio caps your combined debt, every dollar of existing monthly debt directly reduces the housing payment — and therefore the home price — you can qualify for. Paying off a $400/month car loan before applying for a mortgage can meaningfully raise your max home price, often by more than simply saving that same $400 toward a bigger down payment would. If your affordability number here is lower than you expected, check whether the “Limiting Factor” result is your existing debts rather than the housing ratio itself.
A Few Practical Notes
The 28%/36% ratios used here are common industry guidelines, not universal rules — actual approved DTI limits vary by lender, loan program, credit score, and compensating factors, and some borrowers qualify well above 36% back-end under certain loan types. This tool also doesn't factor in private mortgage insurance (PMI), which typically applies below 20% down and would reduce your affordable price further. Use this as a starting estimate before getting pre-approved, not as a guarantee of what a lender will offer.
Freedom Wealth Lab Apps provides general educational tools, not personalized financial advice. Read our full Disclaimer and Affiliate Disclosure. The 28%/36% DTI ratios reflect standard U.S. mortgage-lending convention, not one regulator's official rule.
