House Affordability Calculator — what your income supports

How it works

The calculation runs in three steps. First the housing budget: B = I/12 × d − D, where I is annual gross income, d is the DTI limit (a fraction), and D is your existing monthly debt payments. Property tax and insurance come out of that budget, leaving the principal-and-interest payment M. Second, the amortization formula is inverted: P = M·(1 − (1+r)⁻ⁿ) ⁄ r, where r is the monthly rate (the annual rate divided by 12) and n the number of payments — the loan amount that payment exactly repays over the term. Third, the price adds your down payment to the loan. The DTI limit is an assumption you control, not a rule: lenders set different limits for different loan products (CFPB), so the comparison shows the same income under several commonly used guideposts.

Worked example

The inversion is the step a source publishes: LibreTexts works "Jordan can afford $400 per month" on an auto loan at 12% over 4 years to a present value of $15,189.58 — the loan that $400 a month exactly repays. This calculator runs the same inversion on your housing budget: with $90,000 income, a 36% DTI limit, $500 of monthly debts, and $525 of tax and insurance, it finds a $1,675 principal-and-interest payment supporting roughly a $265,000 loan at 6.5% over 30 years — about $305,000 with $40,000 down. Those housing figures are this calculator's own computation for these inputs; only the $15,189.58 inversion is a published value (LibreTexts).

Frequently asked questions

What is a debt-to-income (DTI) ratio?

It is all your monthly debt payments divided by your gross monthly income (CFPB). In CFPB's worked example, $1,500 of mortgage, $100 of auto loan, and $400 of other debts make $2,000 of monthly payments; against $6,000 of gross monthly income that is a DTI of 33%. Lenders use the ratio to gauge how much of your income is already committed.

Why is the DTI limit an input instead of a fixed rule?

Because there is no single rule: CFPB notes that different loan products and lenders have different DTI limits, and the former 43% cap tied to Qualified Mortgages was replaced by price-based thresholds. So this calculator treats the limit as an assumption you set — the result is the price your income supports *under that assumption*, not a promise of what any lender will approve.

How is the affordable home price calculated?

Three steps: your gross monthly income times the DTI limit, minus existing monthly debts, gives a housing budget; subtracting property tax and insurance leaves a principal-and-interest payment; inverting the amortization formula converts that payment into the loan it exactly repays at your rate and term. The price is that loan plus your down payment.

What do the 28%, 33%, 36%, and 43% scenarios mean?

They are commonly used guideposts, not recommendations: 28% and 36% are the conventional front-end and back-end DTI limits many lenders apply, 33% is the ratio in CFPB's own worked DTI example, and 43% is the former Qualified Mortgage cap that CFPB replaced with price-based thresholds. Seeing the same income under each shows how sensitive the affordable price is to the limit a lender applies.

How do existing debts change what I can afford?

Dollar for dollar: every dollar of monthly debt payments comes straight out of the housing budget before any of it can carry a mortgage. Because a mortgage payment supports many times its own size in principal over a long term, even a modest car or card payment can reduce the supported loan amount by tens of thousands of dollars.

How does the down payment change the price?

It adds to the price directly: the loan amount is set entirely by what your budget can repay, and the down payment sits on top of that loan. It does not change the supported loan itself — though in practice a larger down payment can also improve the loan terms a lender offers, which this calculator does not model.

How accurate is this, and what does it exclude?

It is an estimate of what a budget arithmetic supports, not a lending decision. Lenders also weigh credit score, loan-to-value, reserves, and PMI; property tax and insurance are entered as fixed dollars though they scale with the home; HOA fees and closing costs are excluded. Treat the result as a starting range and confirm against a lender's preapproval.