House Affordability Calculator: How Much House Can You Afford?

What back-end DTI actually means

The back-end DTI ratio compares your total monthly debt obligations (mortgage PITI plus all other debts) against your gross monthly income. Lenders use this as the primary screening metric for whether you can support a given loan. The 36 percent threshold has been the standard for decades; it represents the historical level at which delinquency risk starts climbing meaningfully.

Front-end DTI is a related but stricter measure that looks only at housing costs (PITI plus HOA) as a fraction of gross income. Most conventional underwriters use 28 percent as the front-end ceiling. The calculator works with the back-end ratio because that is what governs the absolute loan amount you can qualify for in most underwriting decisions.

What PITI covers

The maximum monthly housing payment computed here is PITI: principal, interest, property tax, and insurance. Principal and interest are the mortgage itself, computed at the rate and term you enter. Property tax is shown as a percentage of home value, which varies enormously by location: under 0.5 percent in Hawaii and Alabama, over 2 percent in New Jersey and Illinois. Home insurance varies too, but 0.3 to 0.5 percent of home value per year is typical in most US markets.

HOA (homeowners association) dues are not in the default calculation because they apply only to a subset of homes. If you are looking at condos or HOA-governed neighborhoods, mentally subtract the monthly HOA dues from the maximum housing payment shown.

Why the down payment is critical

The down payment serves two purposes. First, it directly reduces the loan principal, which reduces the monthly payment at a fixed rate. Second, it qualifies you for better loan terms: 20 percent down avoids private mortgage insurance (PMI), 5 percent FHA loans require mortgage insurance premiums for the life of the loan, and zero-down VA loans are available only to qualifying veterans. The calculator does not add PMI to the monthly payment; if your down payment is below 20 percent, your real PITI will be roughly 0.5 to 1.0 percent of loan value higher per year.

Closing costs and other real costs

The maximum home price shown does not include closing costs, which run roughly 2 to 5 percent of home price (title, escrow, lender fees, inspections, appraisals, transfer taxes, prepaid interest, prepaid insurance). Plan to have closing costs available as additional cash beyond the down payment. The calculator assumes the down payment is all cash you have to put down toward the home itself.

Practical ways to use this calculator

Negotiating between two house prices. Run the calculator at your current finances and see which one fits comfortably. If a target home is above the maximum shown, you need either a larger down payment, higher income, lower debts, or a lower interest rate.

Deciding whether to wait for rates to drop. Re-run at the current rate and at a hypothetical lower rate to see the maximum-price impact. A 1 percent rate drop typically increases the maximum home price by 10 to 12 percent for the same monthly payment.

Planning a debt paydown before buying. Reduce the monthlyDebts input by an amount you could plausibly pay off in 6 to 12 months and see how much more home that unlocks.

What this calculator does not include

PMI for down payments below 20 percent. FHA upfront mortgage insurance premium and monthly MIP. VA funding fee. Closing costs (typically 2 to 5 percent of home price). HOA dues. Loan origination fees and points. Cash reserves required by some underwriters (typically 2 to 6 months of PITI in liquid assets). State-specific transfer taxes and recording fees. The calculator gives a rough purchase-price ceiling; the maximum you can actually qualify for at a specific lender depends on your full financial profile and the loan program.