House Affordability Calculator

The calculator applies a single 36% debt-to-income limit and works backwards to a price. With the defaults ($100,000 income, $500 of monthly debts, 6.5%, 30 years):

1. Gross monthly income: $100,000 ÷ 12 = $8,333.33.
2. 36% of that is $3,000 for all debt payments.
3. Subtract your existing debts: $3,000 − $500 = $2,500 a month left for the mortgage.
4. The loan that $2,500 a month repays at 6.5% over 30 years: $395,527.05.
5. Assume that loan is 80% of the price, so price = loan ÷ 0.8 = $494,408.81, with $98,881.76 as the down payment.

The 36% figure comes from the 28/36 guideline: no more than 28% of gross income on housing and 36% on all debt. It is a common rule of thumb, not a law or a regulator's rule, and the calculator uses only the 36% half.

The whole $2,500 above goes to principal and interest. In practice, property tax and homeowner's insurance usually come out of the same monthly payment, so the default result is optimistic.

A simple fix: add your estimated monthly tax and insurance to the Monthly debt payments field. If they would be about $550 a month, enter $500 + $550 = $1,050. The mortgage budget drops to $1,950, the maximum loan to $308,511.10 and the price to $385,638.87.

Then check the 28% housing test by hand, since the calculator doesn't run it. 28% of $8,333.33 is $2,333.33 for the full housing payment. After $550 of tax and insurance, $1,783.33 is left for principal and interest, which supports a loan of about $282,143 at 6.5% over 30 years. When your other debts are small, this housing test is the tighter of the two limits.

The price shown assumes you bring 20% of it in cash. If you have less, the price you can reach is roughly the maximum loan plus the cash you actually have. With the $308,511 loan above and $40,000 saved, that is about $348,511, a loan of about 89% of the price.

Below 20% down, lenders generally require private mortgage insurance on conventional loans. Its cost comes out of the same monthly budget, so add your PMI estimate to the debts field as well. Keep closing costs separate from the down payment: they come out of the same savings.

Lenders set their own limits, and they can be looser than 36%. Fannie Mae's guidelines, for example, allow a total debt-to-income ratio of up to 36% on manually underwritten loans, up to 45% when credit score and reserve requirements are met, and up to 50% for loans run through its Desktop Underwriter system. Being approved for more doesn't make the payment comfortable, so treat this calculator's figure as a ceiling to test, not a target.

The rate matters as much as income. Keeping the default income and debts, the maximum price is $521,223.79 at 6% and $469,711.15 at 7%. Choosing a 15-year term at 6.5% cuts it to $358,738.79, because the same payment has to repay the loan in half the time.