Turn income and debt into a clear affordability estimate

This tool estimates the maximum home price you can afford using a simple DTI-based approach. Enter your income, current monthly debts, a down payment, and mortgage assumptions like rate and term. The calculator returns a maximum home price estimate, a monthly payment limit, and an amortization schedule.

Maximum home price estimate Monthly payment and interest view Amortization schedule Charts, compare, PDF export
Max price
DTI based estimate
Payment
Monthly payment cap
Schedule
Principal and interest

How to use the Housing Affordability Calculator

  1. 1

    Enter income and debts

    Type your annual income and your total monthly debt payments, such as car loans or credit cards.

  2. 2

    Set down payment and mortgage assumptions

    Enter a down payment, an estimated annual interest rate, and a loan term in years.

  3. 3

    Choose a max DTI ratio

    Enter a max debt-to-income ratio like 36 or 43 percent. The calculator uses this as a payment limit rule.

  4. 4

    Calculate and compare

    Press Calculate to see the maximum home price, loan details, charts, and the repayment schedule. Add scenarios to compare different rates or terms.

Detailed guide and references▶

How to use the calculator

Enter your annual income, current monthly debt payments, a down payment, and your mortgage assumptions. The calculator computes a maximum monthly mortgage payment using your max DTI and subtracting your existing monthly debt. It then estimates the loan amount that fits that monthly payment and adds your down payment to estimate a maximum home price.

Traditional American family house
Affordability is driven by cash flow and debt limits, not only by the listing price

Debt-to-Income ratio (DTI)

The debt-to-income ratio is the share of your monthly income that goes to debt payments, including the mortgage payment.

  • Formula: DTI = (Total monthly debt payments + mortgage payment) / monthly income
  • Typical thresholds: values like 36 percent or 43 percent are often used as simple guidelines

Loan-to-Value ratio (LTV)

The loan-to-value ratio compares the loan amount to the home price. Higher down payments reduce LTV and can reduce risk.

  • Formula: LTV = Loan amount / home price
  • Impact: larger down payments reduce monthly payments and total interest for the same home price

Mortgage payment calculation

The tool uses the standard amortization relationship between loan amount, interest rate, and number of payments.

  • Monthly payment: P = [r × PV] / [1 − (1 + r)^(-n)]
  • P is monthly payment, r is monthly interest rate, PV is loan amount, n is number of payments

The amortization table shows how each monthly payment splits into interest and principal and how the remaining balance declines over time.

Factors affecting affordability

Income

  • Higher income increases the payment cap under the same DTI rule.
  • Stable income reduces risk in lender assessments.

Debt obligations

  • Existing monthly debts reduce the available mortgage payment.
  • Reducing high-interest debts can increase affordable home price.

Down payment

  • A larger down payment reduces the loan amount needed for the same home price.
  • Lower loan amounts generally reduce total interest paid over time.

Interest rate and loan term

  • Higher rates reduce the loan amount you can support at the same monthly payment.
  • Longer terms reduce monthly payment but can increase total interest.

FAQs

Are the results exact?▶

No. This tool uses simplified rules from your inputs. Real affordability can change with taxes, insurance, HOA, lender rules, and local costs.

Does this include property tax and insurance?▶

No. It estimates principal and interest only. Add taxes, insurance, and HOA separately to plan a full monthly budget.

What max DTI should I use?▶

Common example values include 36 percent or 43 percent, but the right choice depends on lender policy and your personal comfort level.

Why does interest rate matter so much?▶

Rate changes affect how much loan principal fits into a fixed monthly payment. Higher rates reduce affordable loan amount and home price under the same DTI limit.

Key takeaways

  • Affordability is driven by monthly cash flow and debt limits, not only by the home price
  • DTI caps reduce your available mortgage payment when you already have monthly debts
  • Interest rate and term can materially change the maximum loan amount
  • A larger down payment reduces the required loan and total interest
  • Use scenarios to compare rates, terms, and debt changes before you commit

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Calculator

Enter income, debt, loan assumptions, and a max DTI ratio, then press Calculate

These results are for reference only and were developed for educational and testing purposes. Review the source code for logic details.

The results shown are for general reference only and may differ from real lender decisions and monthly housing costs.