Mortgage Affordability Calculator
Find out how much house you can afford based on income, debts, down payment, and interest rate — includes DTI analysis, payment breakdown, and yearly amortization.
Mortgage Affordability Calculator
Your Financial Details
Car loans, student loans, credit cards, etc.
Most lenders cap at 36–43%
Affordability Results
Maximum Home Price You Can Afford
$289,048.82
Loan: $239,048.82 + Down: $50,000.00
Monthly Mortgage
$1,510.95
Total Monthly Payment
$1,900.00
Monthly Property Tax
$289.05
Monthly Insurance
$100.00
Actual DTI
36.0%
Loan-to-Value
82.7%
Down Payment %
17.3%
Total Interest Paid
$304.89K
Payment Breakdown
Amortization Summary (Yearly)
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | $2.67K | $15.46K | $236.38K |
| 2 | $2.85K | $15.28K | $233.53K |
| 3 | $3.04K | $15.09K | $230.48K |
| 4 | $3.25K | $14.89K | $227.24K |
| 5 | $3.46K | $14.67K | $223.78K |
| 6 | $3.69K | $14.44K | $220.08K |
| 7 | $3.94K | $14.19K | $216.14K |
| 8 | $4.21K | $13.93K | $211.93K |
| 9 | $4.49K | $13.64K | $207.44K |
| 10 | $4.79K | $13.34K | $202.66K |
| 11 | $5.11K | $13.02K | $197.55K |
| 12 | $5.45K | $12.68K | $192.10K |
| 13 | $5.82K | $12.31K | $186.28K |
| 14 | $6.21K | $11.93K | $180.07K |
| 15 | $6.62K | $11.51K | $173.45K |
| 16 | $7.07K | $11.07K | $166.39K |
| 17 | $7.54K | $10.59K | $158.85K |
| 18 | $8.04K | $10.09K | $150.81K |
| 19 | $8.58K | $9.55K | $142.22K |
| 20 | $9.16K | $8.97K | $133.07K |
| 21 | $9.77K | $8.36K | $123.30K |
| 22 | $10.42K | $7.71K | $112.87K |
| 23 | $11.12K | $7.01K | $101.75K |
| 24 | $11.87K | $6.26K | $89.88K |
| 25 | $12.66K | $5.47K | $77.22K |
| 26 | $13.51K | $4.62K | $63.71K |
| 27 | $14.41K | $3.72K | $49.30K |
| 28 | $15.38K | $2.75K | $33.92K |
| 29 | $16.41K | $1.72K | $17.51K |
| 30 | $17.51K | $622.56 | $0.00 |
Complete Guide to Mortgage Affordability
What Is Mortgage Affordability?
Mortgage affordability is the maximum home price you can responsibly finance given your income, existing debts, savings for a down payment, and prevailing interest rates. Lenders use a metric called the debt-to-income (DTI) ratio to decide how large a loan they will approve.
Understanding affordability before you shop prevents wasted time on homes outside your budget and protects you from becoming “house poor” — stretched so thin on housing costs that other financial goals suffer. This calculator gives you a realistic ceiling, not just a monthly payment estimate.
The Formulas Behind the Calculator
Maximum Monthly Housing Payment:
Max Housing = (Annual Income / 12) × (DTI% / 100) − Monthly Debts
Where DTI% is your target debt-to-income ratio (typically 36–43%)
Monthly Mortgage Payment (PMT):
PMT = L × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]
Where L = loan amount, r = monthly interest rate, n = total number of payments
Max Loan Amount:
Max Loan = (Max Housing − Down × TaxRate/12 − Insurance/12) / (PMT factor + TaxRate/12)
Accounts for property tax and insurance eating into your housing budget
Benefits of Calculating Affordability First
Focused Home Search
Shop only within your realistic price range and avoid emotional overbidding
Stronger Offers
Knowing your ceiling lets you submit pre-qualified offers that sellers take seriously
Budget Protection
Keep monthly housing costs within safe limits so you can still save and invest. Try our SIP Calculator to balance both goals
Rate Sensitivity
See how even a 0.5% rate change shifts your buying power by tens of thousands
Tips for Maximising Affordability
Pay down existing debt first: Reducing car loans or credit card balances lowers your DTI and directly increases the mortgage a lender will offer. Use our EMI / Loan Calculator to plan payoff schedules
Save a larger down payment: A 20%+ down payment eliminates private mortgage insurance (PMI) and reduces your loan principal, cutting total interest dramatically
Compare loan terms: A 15-year mortgage has higher monthly payments but far less total interest. Check the Compound Interest Calculator to see how investing the savings difference could grow
Common Mistakes
Ignoring Property Tax and Insurance
Many buyers look only at principal and interest. Property taxes and homeowner’s insurance can add 20–30% on top of your base mortgage payment
Maxing Out Your DTI
Just because a lender approves 43% DTI doesn’t mean you should spend that much. A DTI of 28–32% leaves room for emergencies and other goals
Forgetting Closing Costs and Maintenance
Budget an additional 2–5% of the home price for closing costs and roughly 1% per year for upkeep — these are real expenses not captured in the monthly payment. Factor inflation into your long-term housing budget with our Investment Inflation Calculator
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OpenFrequently Asked Questions
How much house can I afford?
Common rule: monthly housing payment (PITI = Principal + Interest + Taxes + Insurance) should be no more than 28% of gross monthly income. Total debt payments (including mortgage) should stay below 36% of gross income (the '28/36 rule'). The calculator runs both DTI ratios automatically based on your inputs.
What is debt-to-income (DTI) ratio?
DTI = Total monthly debt payments ÷ Gross monthly income × 100. Front-end DTI counts only housing; back-end DTI includes ALL debt (car, student loans, credit cards). Most lenders cap back-end DTI at 43% for conventional loans and 50% for FHA. Lower DTI = better loan terms and more buying power.
How does down payment affect affordability?
A larger down payment reduces the loan amount, lowers monthly P&I, eliminates PMI (private mortgage insurance, required when down payment is < 20%), and improves your interest rate. Each 5% increase in down payment typically saves $50–150/month on a $300K home and can boost your buying power by ~$20K.
Should I include property tax and insurance in my budget?
Yes — they're a meaningful part of the monthly cost. Property tax averages 0.5–2.5% of home value annually (varies by state). Homeowner's insurance is typically $80–200/month. PMI adds 0.5–1% of loan amount annually. The calculator includes all of these in the PITI calculation, not just principal + interest.
What's the impact of mortgage rate changes?
On a $400K home with 20% down ($320K loan) over 30 years: 6% rate → $1,919/month P&I. 7% rate → $2,128/month. 8% rate → $2,348/month. Each 1% rate increase reduces buying power by ~10%. When rates fall, you can either buy MORE house or save the difference.
Should I buy or rent?
Depends on time horizon, local price-to-rent ratios, and opportunity cost. Generally: buy if you'll stay 5+ years and price-to-rent ratio is below 20. Rent if you'll move soon, prefer flexibility, or live in expensive markets where renting is cheaper than mortgage + tax + maintenance. See our Rent vs Buy Calculator for a detailed comparison.