Mortgage Affordability Calculator
Determine how much you can borrow with this mortgage affordability calculator. Input your annual income, monthly debts (car loans, credit cards, student loans), down payment amount, mortgage interest rate, loan term and your preferred debt-to-income (DTI) ratio to find your maximum loan amount and home purchase price. The calculator uses the PMT inverse formula, the same standard method lenders use to size mortgages based on income constraints. It shows your maximum housing payment based on your DTI limit, then subtracts estimated property taxes and insurance to calculate the maximum loan you can carry. Perfect for understanding your borrowing power before shopping for a home, comparing different DTI scenarios (conventional 28-43%, FHA up to 50%), or planning how much down payment you need to reach your target price.
On a $100,000 annual income with $300/month in existing debts, a 36% DTI limit, a 6.5% rate and a 30-year term, you can borrow roughly -- and buy a home priced up to --. Enter your own numbers below for an exact figure.
How mortgage affordability is calculated
Lenders assess affordability using two debt-to-income ratios. The back-end DTI (all monthly debts divided by gross monthly income) is the primary constraint: conventional loans typically require it to stay at or below 36-43%. The front-end DTI (housing costs only) is commonly capped at 28%.
This calculator works from the DTI threshold down. It multiplies your gross monthly income by the DTI percentage, subtracts your existing monthly debts, then subtracts property tax and insurance to find the maximum principal-and-interest payment. That payment is then converted into a loan amount using the PMT inverse formula.
gross monthly income = annual income / 12
max PITI = gross monthly income x DTI%
max P+I = max PITI - monthly tax and insurance
r = annual rate / 1200
n = term years x 12
max loan = max P+I x ((1 + r)^n - 1) / (r x (1 + r)^n)
max home price = max loan + down payment
Worked example
Inputs: $100,000 income, $300/month other debts, $60,000 down payment, 6.5% rate, 30-year term, $500/month tax and insurance, 36% DTI.
- Gross monthly income = $100,000 / 12 = $8,333.33.
- DTI cap = $8,333.33 x 0.36 = $3,000.00.
- Less other debts: $3,000 - $300 = $2,700 max PITI.
- Less tax + insurance: $2,700 - $500 = $2,200 max P+I payment.
- r = 6.5 / 1200 = 0.005417; n = 360 months.
- (1 + r)^n = (1.005417)^360 = 6.8485.
- Max loan = $2,200 x (6.8485 - 1) / (0.005417 x 6.8485) = $2,200 x 5.8485 / 0.037096 = $346,691 (approx.).
- Max home price = $346,691 + $60,000 = $406,691.
- Front-end DTI check = ($2,200 + $500) / $8,333 = 32.4% (within the 28% front-end guideline if you lower tax/insurance, otherwise consider a longer term or higher income).
Mortgage affordability: frequently asked questions
What DTI ratio do lenders use for mortgage affordability?
Conventional lenders typically apply a back-end DTI limit of 36% to 43% of gross monthly income, meaning all monthly debt payments (including the new mortgage PITI) must stay below that threshold. The CFPB notes that 43% is the general qualified-mortgage ceiling, though some programs allow up to 50% with compensating factors. The front-end ratio (housing costs only) is commonly capped at 28%.
How is the maximum loan amount calculated?
The calculator uses the PMT inverse formula: max loan = monthly payment x ((1 + r)^n - 1) / (r x (1 + r)^n), where r is the monthly interest rate (annual rate divided by 1,200) and n is the number of monthly payments. This is the standard present-value-of-an-annuity formula used by every lender.
Does this include property tax and insurance?
Yes. The monthly property tax and insurance field (PITI) is subtracted from the maximum housing payment before the loan is sized. Only the principal-and-interest portion drives the PMT inverse. Your total housing payment (P+I plus tax and insurance) is shown separately so you can check both the front-end ratio and the total cash flow.
What is the difference between the front-end and back-end DTI?
Front-end DTI (also called the housing ratio) is your total monthly housing costs (principal, interest, property tax and insurance) divided by gross monthly income. Back-end DTI adds all other monthly debts (car loans, student loans, credit cards) to the housing costs and divides by gross income. Lenders assess both; the back-end limit is usually the binding constraint.
Official sources
- DTI guidelines: Consumer Financial Protection Bureau, "What is a debt-to-income ratio?", verified June 2026.
- Qualified mortgage rules (43% ceiling): CFPB, Ability-to-Repay and Qualified Mortgage rule.
- PMT inverse formula: standard time-value-of-money identity, consistent with the Federal Reserve's loan amortisation guidance.
Reviewed by the CalculatorHub team, edited by James Graham, 12 June 2026. See our methodology. General information, not financial advice.