Mortgage Affordability Calculator
Quickly compute mortgage affordability with accurate formulas. See amortization schedules, growth projections, and side-by-side comparisons.
Reviewed by Sahil, Senior Finance & Tax Editor
Formula
Max Housing Payment = min(28% x Gross Monthly Income, 36% x Gross Monthly Income - Other Debts)
The calculator applies the 28/36 DTI rule: housing costs must not exceed 28% of gross monthly income (front-end), and total debt must not exceed 36% (back-end). It then works backward from the maximum housing payment to determine the largest mortgage and home price you qualify for, after subtracting property taxes, insurance, and HOA from the available payment budget.
Worked Examples
Example 1: Median-Income First-Time Buyer
Problem:A buyer earns $75,000/year with $300/month in debts, plans 10% down, at 6.75% for 30 years. Property tax 1.2%, insurance $1,400/year, no HOA.
Solution:Gross monthly income = $6,250\nMax housing (28%) = $1,750\nMax total debt (36%) = $2,250, less $300 debts = $1,950\nBinding limit = $1,750 (front-end)\nAfter insurance ($117/mo), available for P&I + tax = $1,633\nIterative solve: max home ~$251,000\nLoan = $226,000 | Down payment = $25,100\nMonthly P&I = $1,466 | Tax = $251 | Total = $1,750
Result:Max home price: ~$251,000 | Monthly payment: $1,750 | Front-end DTI: 28.0%
Example 2: High-Income Buyer with Debt
Problem:Household earns $150,000/year with $1,200/month in car and student loan payments. 20% down, 6.5% rate, 30-year term, 1.5% property tax, $2,000 insurance, $300/month HOA.
Solution:Gross monthly income = $12,500\nMax housing (28%) = $3,500\nMax total debt (36%) = $4,500, less $1,200 debts = $3,300\nBinding limit = $3,300 (back-end, debt-constrained)\nAfter insurance ($167/mo) and HOA ($300), available for P&I + tax = $2,833\nIterative solve: max home ~$392,000\nLoan = $314,000 | Down payment = $78,000
Result:Max home price: ~$392,000 | Monthly payment: $3,300 | Back-end DTI: 36.0%
Frequently Asked Questions
How is this different from a Home Affordability Calculator?
This Mortgage Affordability Calculator focuses on the mortgage itself: given your income, debts, rate, and loan term, it computes the maximum loan amount and home price you can qualify for under the 28/36 DTI guidelines. The Home Affordability Calculator takes a broader view, letting you input specific down payment amounts and compare different scenarios to decide how much house fits your overall budget.
How does down payment percentage affect affordability?
A larger down payment lets you buy a more expensive home with the same mortgage payment because you borrow a smaller fraction of the purchase price. For example, putting 20% down means you finance 80% of the home value, while 10% down means financing 90%. Additionally, putting less than 20% down typically requires private mortgage insurance (PMI), which further reduces affordability.
What credit score do I need for the best mortgage rates?
A FICO score of 760 or higher typically qualifies you for the lowest advertised mortgage rates. Dropping from 760 to 700 can cost you 0.25-0.50% more in interest — on a $400,000 30-year loan, that difference costs roughly $60-$120 more per month and over $25,000 in extra interest. Scores between 620-699 still qualify for conventional loans but at noticeably higher rates. Scores below 580 generally require FHA loans, which accept down payments as low as 3.5% but mandate mortgage insurance for the life of the loan. Before applying, pay down revolving balances to below 30% of credit limits — this alone can boost your score 20-40 points.
How do mortgage points work?
Mortgage discount points are prepaid interest you pay at closing to permanently reduce your loan's interest rate. One point costs 1% of the loan amount — on a $350,000 mortgage, one point costs $3,500 — and typically lowers your rate by 0.20-0.25%. To determine whether buying points makes sense, calculate your break-even period: divide the upfront cost by your monthly savings. For example, $3,500 paid to save $55/month breaks even in about 64 months (5.3 years). If you plan to stay in the home beyond that point, buying points saves money. If you may sell or refinance sooner, keep the cash. Points are tax-deductible in the year of purchase for a primary residence.
Reviewed by Sahil, Senior Finance & Tax Editor · Editorial policy