Maximum loan
$347,845
Enter your gross monthly income, what you already owe each month, and what you have for a down payment. The calculator returns a maximum purchase price — and then shows you the same income priced against four different debt-to-income caps, because that cap is a lender's policy decision and it changes the answer by more than almost anything you control.
The housing cost in this model is principal and interest only. Property tax, homeowners insurance, mortgage insurance and HOA dues are excluded, so the numbers above are lending ceilings rather than budgets. See the section below on how much that gap is worth.
| DTI cap | Monthly housing budget | Maximum loan | Maximum price |
|---|---|---|---|
| 28% | $1,740.00 | $254,307 | $314,307 |
| 36% | $2,380.00 | $347,845 | $407,845 |
| 43% | $2,940.00 | $429,691 | $489,691 |
| 50% | $3,500.00 | $511,537 | $571,537 |
The calculation runs backwards from your income. The debt-to-income cap gives a maximum total monthly debt payment; existing debts are subtracted from it, and what remains is the housing budget. That budget is then inverted through the amortising loan formula to find the largest loan whose monthly principal and interest equals it. Adding your down payment gives the maximum purchase price.
Affordability is usually presented as a single number, which hides the fact that the number is the product of a policy choice. Lenders and mortgage programmes apply different debt-to-income ceilings, and the same income produces very different answers under each.
| DTI cap | Housing budget | Maximum loan | Maximum price |
|---|---|---|---|
| 28% | $1,740.00 | $254,307 | $314,307 |
| 36% | $2,380.00 | $347,845 | $407,845 |
| 43% | $2,940.00 | $429,691 | $489,691 |
| 50% | $3,500.00 | $511,537 | $571,537 |
Gross monthly income $8,000, existing debt $500, $60,000 down, 7.28% over 30 years
The spread between the top and bottom of that table is $257,230 — roughly 82% of the lowest figure — on unchanged income and unchanged cash. Nothing about the household changed. What changed is the ratio the lender was willing to accept.
Two of those bands carry specific meaning in the US market. The 28/36 convention — no more than 28% of gross income on housing and no more than 36% on all debt — is the traditional rule of thumb, and the stricter of the two is what the 28% row represents. The 43% figure is the threshold that defines a qualified mortgage under the ability-to-repay rules, which is why it appears so often in lender advertising. A 50% cap exists in some programmes and is a stress case rather than a target.
The important consequence is that a pre-approval letter is not a statement about what you should spend. It is a statement about the maximum a lender is willing to risk, and the risk is secured against the property, not against your comfort.
This is the part of affordability that calculator pages routinely leave out, and it is the part that causes the most trouble. The debt-to-income calculation above treats housing cost as principal and interest, because that is the portion the loan determines and the portion a lender can compute. In practice, your monthly housing outflow also includes property tax, homeowners insurance, and where the down payment is below 20% of the price, mortgage insurance.
The effect is not small. On a $407,845 purchase with $60,000 down, the loan is $347,845 and the principal and interest is $2,380 a month, which is exactly the 36% budget. Add property tax at a typical effective rate, homeowners insurance, and mortgage insurance on a loan above 80% of value, and the real monthly figure is materially higher than the budget the band was calculated from. Using the 36% band is then no longer a 36% debt-to-income ratio at all.
The fix is straightforward, even if it is unpopular: decide what your total monthly housing cost can be including everything, subtract your estimate of tax, insurance and association dues, and enter the remainder as the housing budget by lowering the debt-to-income cap until the principal and interest figure matches. If you want a $2,380 total housing cost rather than a $2,380 principal-and-interest cost, that corresponds to roughly a 30% cap on these inputs rather than 36%.
If you know the tax and insurance figures for a specific property, the mortgage payment calculator shows the principal and interest for a given loan, and the two figures together give you the full outflow.
Three levers sit on your side of the table, in descending order of how much they move the number.
Two levers are frequently mistaken for controllable when they are not. The debt-to-income cap is set by the lender and the programme. The term is chosen by you but its effect is inverted from what it appears: stretching to 30 years raises the maximum price the same income qualifies for, and it also raises the total interest substantially. Qualifying for more is not the same as affording more.
At a 36% debt-to-income cap with $500 of existing monthly debt and $60,000 down, the ceiling is $407,845 at a 7.28% rate over 30 years. At the stricter 28% cap it falls to $314,307; at a 43% cap, the level that defines a qualified mortgage, it rises to $489,691. The band matters more than any other input you control, which is why this page shows all four.
On the debt side, everything with a required monthly payment: car loans, student loans, minimum credit card payments, personal loans, child support and any other property's mortgage, including one you rent out. On the income side, gross monthly income before tax. The ratio is what remains for housing after those obligations are subtracted, and this calculator computes exactly that.
Safe is not a question arithmetic can answer, but the shape of the risk can be stated. At 43%, $3,440 of an $8,000 gross income is committed before tax, and after tax and payroll deductions the housing payment is a considerably larger share of what actually arrives. The practical test is to take the payment figure from this calculator and see whether it fits inside your real take-home pay alongside everything else, not whether it fits inside a lender's ratio.
The down payment adds to your ceiling roughly dollar for dollar, so a larger one lets you buy more. It also removes mortgage insurance once you reach 20% of the price, which is a bigger step than the linear effect. Against that, cash paid into a down payment is no longer available, and this calculator treats the down payment as money already set aside rather than considering what else it could do. The tool prices the borrowing effect; it does not price the liquidity you give up.
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Cluster us/mortgage · Unit us-mortgage-affordability-calculator · Engine amortizing-loan / affordability · Method: Housing budget is gross monthly income times the debt-to-income cap minus existing monthly debt payments; the maximum loan is the inverse amortizing-loan formula evaluated at that budget, and the maximum price adds the down payment.