Affordability Calculator
Two Ratios Decide What a Lender Will Approve
Home affordability isn't one number — it's the intersection of two separate limits lenders apply simultaneously: how much of your income can go to housing alone, and how much can go to housing plus every other debt you carry. Whichever limit is tighter is the one that actually caps your purchase price, and this calculator works through both before layering in the loan math to arrive at a maximum home price.
The Formula
Max P&I = Max PITI − Estimated Tax/Insurance − HOA
Max Loan = P&I annuity solved for principal
Max Home Price = Max Loan + Down Payment
PITI stands for Principal, Interest, Taxes, and Insurance — the full monthly housing obligation lenders underwrite against, not just the loan payment.
Where This Calculation Matters
- House hunting with a real budget — knowing your maximum price before touring homes avoids falling for a listing you can't actually finance.
- Comparing loan terms — a longer amortization or lower rate raises the loan a given monthly payment can support, directly changing the affordable price.
- Accounting for HOA and escrow — condos and planned communities carry monthly HOA dues that eat into the same budget as principal and interest, often surprising first-time buyers.
- Testing sensitivity to debt — adding a car loan or increasing monthly debts shows immediately how much home-buying power it removes.
Standard Underwriting Ratios
The default front-end and back-end ratios in this calculator (28% and 36%) mirror the conventional mortgage guideline long used as a starting benchmark, though individual lenders and loan programs vary:
| Ratio | Limit | Covers |
|---|---|---|
| Front-end | 28% of gross income | Principal, interest, taxes, insurance, HOA |
| Back-end | 36% of gross income | Housing payment plus all other recurring debt |
Some loan programs, particularly FHA and certain conventional products with strong compensating factors, permit higher back-end ratios — adjust the Front-End and Back-End Ratio fields to match your specific loan program.
How to Use This Calculator
- Enter Annual Income and any Other Monthly Debts.
- Enter the Down Payment you plan to make.
- Enter the expected Interest Rate and Loan Term (years).
- Optionally enter Monthly Tax & Insurance and Monthly HOA if known; leave blank to estimate on price alone.
- Adjust Front-End Ratio % and Back-End Ratio % if your target loan program differs from the 28/36 default.
- Select Calculate to see the maximum affordable home price.
Related Calculations
Cross-check the result against the Housing Affordability Calculator, or estimate the cash needed at closing with the Closing Cost Calculator.