cost-calculation
Mortgage Affordability Calculator (2026) — How Much Home Can You Afford?
How much house can I afford? The answer depends on your income, existing debt, how much you can put down, and which DTI threshold you're targeting. This calculator applies the standard 28/36/43% rules — pick your target, adjust your inputs, and see the max home price that keeps your housing payment within that ratio.
Educational estimate based on the inputs you entered — not financial, legal, or tax advice. Verify against your specific situation before acting on this output.
How it works
Methodology
Inputs
- Annual gross income
- Pre-tax annual income across all borrowers on the loan.
- Monthly debt payments
- Sum of minimum monthly payments on credit cards, auto loans, student loans, and other installment debt. Does NOT include current rent.
- Down payment available
- Cash available for down payment. Does not include closing costs, which typically run 2–5% of purchase price.
- Interest rate
- Expected mortgage rate — use current market rate as a starting point; your actual rate depends on credit score, loan type, and lock timing.
- Loan term
- Amortization length — longer term = lower payment but more interest.
- Target DTI
- 28% conservative (front-end only), 36% standard (back-end with typical debt), 43% aggressive (FHA / Fannie flex ceiling).
- Property tax rate (% of home value)
- Annual property tax as a percentage of the home's value. National average ~1.0–1.2%; varies significantly by state and county.
- Annual home insurance estimate
- Annual homeowners insurance premium estimate.
Formula
max_housing_monthly = (annual_income / 12) × DTI% − monthly_debt T+I monthly estimate = (purchase_price × prop_tax% / 12) + (annual_ins / 12) max_P+I = max_housing_monthly − T+I estimate max_loan = max_P+I × ((1+r)^n − 1) / (r × (1+r)^n) [where r = monthly rate, n = months] max_home_price = max_loan + down_payment Two-step iteration: T+I depends on home price, so we solve with a first estimate of home price, recompute T+I, then solve again for max_loan.
Assumptions
- DTI % guidelines are rule-of-thumb heuristics — actual lender approval depends on credit score, asset reserves, employment type, and automated underwriting system overlays.
- Property tax is estimated as a fixed % of purchase price — actual tax varies by county assessed value and exemptions. Check your county assessor's website for accurate local rates.
- Two-step iteration is accurate for most typical inputs. Unusual input combinations (e.g., very high prop tax rates) may benefit from running the Mortgage Payment Calculator with the resulting max price to verify.
Worked examples
Dual income, standard DTI
- Annual gross income
- $140,000
- Monthly debt payments
- $600
- Down payment
- $70,000
- Interest rate
- 7.0%
- Loan term
- 30 years
- Target DTI
- 36% standard
- Property tax rate
- 1.2%
- Annual insurance
- $1,800
Max housing payment ≈ $3,600/mo. Max home price ≈ $420,000. At 20% down ($84K needed) the math is tight — consider increasing down payment or targeting 43% DTI.
Single income, conservative DTI
- Annual gross income
- $90,000
- Monthly debt payments
- $400
- Down payment
- $40,000
- Interest rate
- 7.0%
- Loan term
- 30 years
- Target DTI
- 28% conservative
- Property tax rate
- 1.0%
- Annual insurance
- $1,500
Max housing payment ≈ $1,700/mo at 28% DTI. Max home price ≈ $230,000. Stretching to 36% DTI raises max home price to ~$310,000.
Frequently asked
Questions readers ask
What is DTI and why does it matter for a mortgage? +
DTI (debt-to-income ratio) is your total monthly debt payments divided by your gross monthly income. Lenders use it to gauge how much of your income goes to servicing debt. The front-end DTI covers housing costs only (the 28% rule). The back-end DTI covers all debt including housing, credit cards, auto loans, and student loans (the 36–43% rule). Most conventional lenders target back-end DTI ≤ 43%; FHA allows up to 50% in some cases.
What is the 28/36 rule for mortgages? +
The 28/36 rule is a classic affordability guideline: your monthly housing costs (P+I + taxes + insurance) shouldn't exceed 28% of gross income (front-end), and total monthly debt payments shouldn't exceed 36% of gross income (back-end). These are guidelines, not hard lender rules — Fannie Mae and Freddie Mac use automated underwriting that can approve loans at higher DTIs with compensating factors like strong credit and large down payments.
Does this calculator include PMI in the affordability math? +
No — this calculator focuses on the income-to-payment relationship using T+I (taxes + insurance) as the main offset. PMI adds to the actual monthly payment once you get a lender quote. If your calculated max loan amount results in LTV > 80%, budget for PMI on top of the affordability estimate.
How accurate is the maximum home price estimate? +
The estimate is directionally accurate for typical income/debt profiles, but lenders apply additional overlays: credit score requirements, asset reserves, employment history, and sometimes stricter DTI caps for certain loan types. Use this as a planning number, then get a pre-qualification letter from a lender for a real range.
What's the difference between pre-qualification and pre-approval for a mortgage? +
Pre-qualification is a quick estimate based on self-reported income and debt — no hard credit pull, not binding. Pre-approval involves verified income documents, a hard credit inquiry, and a lender commitment to lend up to a specific amount subject to final underwriting. In most markets, a pre-approval letter is required to make a competitive offer on a home.
This tool is for educational purposes only and is not financial, legal, or tax advice. Final terms and eligibility depend on lender underwriting; consult a tax professional before acting on tax-tool output. ClearValue Lending is a funding platform.
https://clearvaluelending.com/tools/mortgage-affordability-calculator