Mortgage Affordability Calculator
How Much House Your Income Actually Supports
Lenders don't ask what home you'd like to buy — they ask what your income and existing debt can support, using two ratio tests that predate any specific mortgage rate quote. This calculator applies those same tests, the front-end and back-end ratios used across conventional underwriting, to work backward from your income, debts, and loan terms to a maximum affordable home price, rather than starting from a price and checking if it fits.
The Formula
Back-End Limit = (Monthly Income × 36%) − Monthly Debts
Max Housing Payment = min(Front-End Limit, Back-End Limit)
Max Loan = Max P&I Payment × ((1+r)n − 1) ÷ (r × (1+r)n)
Max Home Price = Max Loan + Down Payment
The front-end ratio caps housing costs alone at 28% of gross monthly income; the back-end ratio caps total debt obligations, including housing, at 36%. Whichever limit is more restrictive determines the maximum housing payment, from which property tax and insurance are subtracted before the remaining principal-and-interest budget is amortized into a loan amount.
Where This Matters
- House hunting within budget — knowing the ceiling before touring homes avoids falling for a listing that a lender won't actually approve.
- Debt payoff strategy — because the back-end ratio subtracts existing monthly debts directly, paying down a car loan or credit card before applying can meaningfully raise the affordable price.
- Rate-shock planning — running the same income and debt figures at a higher interest rate shows how much affordability erodes if rates rise before closing.
Worked Example
| Step | Value |
|---|---|
| Monthly income | $7,500.00 |
| Front-end limit (28%) | $2,100.00 |
| Back-end limit (36% minus $400 debts) | $2,300.00 |
| Max housing payment | $2,100.00 |
| Monthly tax + insurance | $400.00 |
| Max principal & interest payment | $1,700.00 |
| Max loan amount | $268,958.39 |
| Plus $40,000 down payment | |
| Estimated max home price | $308,958.39 |
In this example the front-end ratio (28%) is the binding constraint, not the back-end ratio, because monthly debts were relatively low.
How to Use This Calculator
- Enter your annual household income.
- Enter your existing monthly debt payments, if any (car loans, student loans, credit cards).
- Enter your planned down payment, if any.
- Enter the annual interest rate and loan term in years.
- Enter estimated annual property tax and home insurance.
- Select Calculate to see your maximum affordable home price.
Related Calculations
Once you have a target price, use the Monthly Payment Calculator to size the exact payment, or the Debt-to-Income Ratio Calculator to check your current DTI before applying.