Lenders use debt-to-income ratio to determine how much you can borrow. This calculator estimates the maximum home price you can afford based on your income, existing debt, down payment, and a target DTI limit. Property taxes, homeowners insurance, and HOA fees are not included.
How to use this calculator
- Enter your gross monthly income before taxes.
- Enter total monthly debt payments (car loans, student loans, credit cards, etc.).
- Enter your planned down payment.
- Enter the expected mortgage rate and loan term.
- Adjust the maximum DTI if needed (36% is a common guideline).
- Review max monthly payment, loan amount, and home price.
Formula
Maximum monthly housing payment is derived from your income and DTI limit minus existing debt. Max loan amount is calculated by inverting the amortization formula, and max home price adds your down payment to the max loan amount. This payment covers principal and interest only—not taxes, insurance, or HOA.
Example
With $8,000 monthly income, $500 in debt, a 36% DTI cap, and a $50,000 down payment at 6.5% over 30 years, you may afford a home priced around $400,000.
Frequently asked questions
- What DTI do lenders typically use?
- Many conventional lenders prefer a total DTI of 36% or less, though some programs allow up to 43% or higher with strong credit and reserves.
- Does this include property taxes, insurance, or HOA?
- No. This estimate covers principal and interest only. Budget separately for property taxes, homeowners insurance, HOA fees, and maintenance when planning your purchase.