Question 1

How do I use the Mortgage Affordability Calculator?

Accepted Answer

Enter your gross monthly income, your total monthly debt payments (car loan, student loans, credit cards, etc.), and the DTI limit your lender uses (often 36% or 43%). Then enter the interest rate and loan term you expect, and optionally the down payment percentage (default 20%). Click calculate to see your max affordable P&I payment, max loan amount, and max home price.

Question 2

What is a DTI limit?

Accepted Answer

The debt-to-income limit is the maximum ratio of your total monthly debt payments to your gross monthly income that a lender will allow. Back-end DTI includes all debts; front-end DTI includes only housing. Many conventional programs use 36% back-end; some allow 43% or higher. Use our DTI Calculator to see your current ratio.

Question 3

Why is my max home price lower than I expected?

Accepted Answer

Your max home price is driven by your income, existing debt, and the DTI cap. If you have a lot of existing debt, less of your income is “left over” for a mortgage payment, which reduces the loan amount and thus the home price. Paying down debt or increasing income raises your affordability. A higher down payment percentage does not change the max loan; it only shows what home price that loan implies when you put more money down.

Question 4

Does this include property tax and insurance?

Accepted Answer

This calculator uses only principal and interest (P&I). Lenders sometimes use a front-end DTI that includes estimated taxes and insurance. To be safe, you may use a lower DTI limit (e.g. 28–32%) to leave room for taxes and insurance. Use the Mortgage Payment Calculator to see full monthly payment including taxes and insurance for a specific home price.

Question 5

What if my max affordable payment is zero?

Accepted Answer

If your existing debt already uses up your allowed DTI (e.g. income × 36% minus debt is zero or negative), the calculator shows zero. You would need to pay down debt or increase income before a lender would approve a new mortgage under that DTI limit.