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How mortgage affordability is calculated
Automated underwriting systems (Fannie Mae's Desktop Underwriter and Freddie Mac's Loan Product Advisor) check two ratios together, not just one: a front-end ratio — your housing payment alone, capped around 38% of gross income — and a back-end ratio — housing plus all other debt, capped around 47.5%. Your real number is set by whichever of the two is more restrictive for your situation.
This calculator estimates your maximum affordable home price the same way — working backward from both limits simultaneously, along with your down payment and current interest rate.
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 under the back-end ratio.
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?
Automated underwriting systems (DU/LP) typically approve a front-end ratio up to around 38% of gross income and a back-end ratio up to around 47.5%. This calculator uses both limits together, since real approvals are bound by whichever ratio is more restrictive.
What is debt-to-income ratio?
Debt-to-income ratio is the percentage of your gross monthly income that goes toward debt payments. Lenders check two ratios: front-end (housing payment only) and back-end (housing plus all other debt), and both need to fit within lender limits.
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.