Two ratios decide what you can afford
Lenders don’t guess at affordability with a rough income multiple — they run your numbers through two debt-to-income (DTI) tests. Your loan is sized by whichever test gives the smaller answer, and most simple calculators only ever look at one of them (or neither). Knowing which ratio binds is the difference between a budget you can change by paying off a credit card and one you can only change by earning more.
The 28/36 rule
housing ≤ 28% · income and housing + debts ≤ 36% · income
The front-end test caps your housing payment at 28% of gross monthly income. The back-end test caps your housing payment plus all other monthly debts at 36%. We solve each for the housing payment, take the smaller, then invert the full PITI + HOA cost to back out the home price that fits.
What makes this calculator different
- Both DTI ratios, not a crude multiple. We compute the front-end (28%) and back-end (36%) budgets and use the binding one — the way underwriters actually qualify you.
- It names your limiting factor. A clear callout tells you whether your housing payment or your existing debt is the constraint — and whether paying down debt would help.
- Real ownership costs. Property tax, insurance, and HOA are folded into the price inversion, not ignored — so the number is the home price, not just the loan.
- A full payment breakdown. See principal & interest, tax, insurance, and HOA at the maximum price you qualify for.
Frequently asked questions
What’s the difference between the front-end and back-end DTI ratio?+
Both are debt-to-income ratios lenders use to size your loan. The front-end ratio looks only at your total housing payment (principal, interest, taxes, insurance, and HOA) as a share of your gross monthly income. The back-end ratio adds all your other monthly debt payments — car loans, student loans, minimum credit-card payments — on top of the housing payment. A lender approves you against both, and the smaller of the two budgets wins. This calculator tells you exactly which one is constraining you.
What is the 28/36 rule?+
It’s the classic affordability guideline: keep your housing payment at or below 28% of gross monthly income (the front-end ratio), and keep all your debt payments combined at or below 36% (the back-end ratio). The defaults here are 28 and 36, but you can change them — some loan programs allow higher ratios, and a conservative budget might use lower ones.
Why do lenders use DTI ratios instead of a simple income multiple?+
A crude "buy a home worth 3–4× your income" rule ignores interest rates, property taxes, insurance, HOA dues, and — crucially — the other debts you already carry. Two people with identical incomes can afford very different homes if one has a $600 car payment and the other has none. DTI ratios capture that, which is why every mortgage underwriter uses them and why this calculator works the same way.
How does paying down debt change what I can afford?+
Only when the back-end ratio is your binding constraint. The back-end budget is (back-end % × gross monthly income) − existing debts, so every dollar of monthly debt you eliminate is a dollar added straight back to your housing budget — up until you hit the front-end cap, after which paying down debt no longer helps. If the calculator shows the front-end ratio binding, the lever is higher income or a larger down payment, not less debt.
What costs are NOT included in this estimate?+
This models the core housing payment — principal, interest, property tax, insurance, and HOA. It does not include private mortgage insurance (PMI), which applies when your down payment is under 20%, nor utilities, maintenance, closing costs, or moving expenses. It also assumes a fixed-rate, fully-amortizing loan. Treat the result as a qualifying ceiling, not a comfortable monthly budget.
Disclaimer: This calculator is for educational purposes only. It estimates a qualifying ceiling, not a comfortable budget, and excludes PMI, utilities, maintenance, and closing costs. Actual rates, DTI limits, and terms vary by lender, loan program, and credit profile. It is not financial or lending advice.