Mortgage Affordability Calculator

How Our Mortgage Affordability Calculator Works & How to Use It

Based on your particular financial circumstances, our Mortgage Affordability Calculator helps you determine the highest property price you can actually afford. It ensures you do not exceed your budget by using the debt-to-income (DTI) ratio, a crucial indicator that lenders consider.

Two common DTI limits are applied by the tool:

Front-end ratio (28%): You should not spend more than 28% of your gross monthly income on housing each month (principal, interest, taxes, and insurance).

Back-end ratio (36%): All of your monthly debts, including the new mortgage, should not exceed 36% of your income.

You enter your yearly income, current monthly debts, down payment, interest rate, loan term, property taxes, and homeowners insurance into the calculator. First, it determines the highest home payment allowed under both ratios. The amount available for principal and interest is calculated by subtracting estimated taxes and insurance from that total. It then calculates the loan amount you may qualify for using the standard loan amortization formula. The estimated affordable home price is calculated by adding your down payment.

How to use it: Simply click “Calculate Affordability” after entering your current numbers in all the fields (estimates are acceptable). Your maximum property price, loan amount, and a detailed breakdown of your monthly payments will be displayed in the results. You can then download a polished PDF summary to save or share with your lender or real estate agent.