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How mortgage affordability is calculated
Lenders look at your debt-to-income ratio (DTI) — the percentage of your gross monthly income that goes toward debt, including your new mortgage payment. Most lenders want your total DTI under 43%, with the mortgage payment itself ideally under 28% of gross income.
This calculator estimates your maximum affordable home price by working backward from a healthy DTI, your down payment, and current interest rates.
What affects how much you can afford
Income — Higher income raises how much monthly payment you can comfortably support.
Existing debts — Car payments, credit cards, and student loans reduce how much room is left for a mortgage payment.
Down payment — A larger down payment reduces your loan amount and monthly payment, increasing affordability.
Interest rate — Even small rate changes significantly affect your monthly payment and total affordability.
Frequently asked questions
How much house can I afford?
Most lenders use a debt-to-income ratio guideline of around 36-43% to determine affordability, factoring in your income, existing debts, down payment, and current interest rates.
What is debt-to-income ratio?
Debt-to-income ratio is the percentage of your gross monthly income that goes toward debt payments, including your potential new mortgage payment. Lenders typically want this below 43%.
Does this include taxes and insurance?
This calculator estimates principal and interest. Property taxes and homeowners insurance vary by location and should be added separately — typically 1-2% of home value annually for taxes, plus insurance costs.