Calculate how much house you can afford based on your income, debt, and down payment. Get detailed DTI analysis.
House affordability is calculated by determining the binding maximum allowable monthly housing expenditure under dual front-end and back-end debt-to-income (DTI) constraints, subtracting taxes, insurance, and HOA dues, and solving for the maximum amortized mortgage loan capacity based on present value formulas.
Determining your home purchasing power requires balancing how much a lender will legally approve against what your monthly budget can comfortably sustain. Mortgage lenders evaluate affordability primarily through Debt-to-Income (DTI) ratios.
Front-End DTI (Housing Ratio): The percentage of your gross monthly income dedicated exclusively to housing expenses (Principal, Interest, Property Taxes, Homeowners Insurance, and HOA dues).
Back-End DTI (Total Debt Ratio): The percentage of gross monthly income required to service all recurring debt obligations combined—including housing, car payments, student loans, and credit card minimums.
Lenders enforce the more restrictive of the two limits to ensure borrowers do not become house-poor.
Conventional conforming loans backed by Fannie Mae and Freddie Mac traditionally cap front-end housing costs at 28% and total back-end debt at 36% of gross monthly income.
If you carry significant consumer or auto debt, the 36% back-end ceiling will reduce your allowable housing payment even if your front-end ratio is well below 28%.
FHA loans allow more generous underwriting thresholds—typically 31% front-end and 43% back-end—allowing buyers with higher existing debt or lower down payments (as low as 3.5%) to qualify.
VA loans for qualifying military service members and veterans generally evaluate a 41% back-end DTI benchmark combined with a mandatory residual income test to verify sufficient living capital after debt service.
Every dollar added to your down payment directly expands your top-line purchase price without increasing your monthly borrowing obligation.
Conversely, higher interest rates consume a larger share of your qualifying monthly payment in interest, reducing maximum loan size. For example, a 1% rate increase reduces maximum loan affordability by approximately 9–11%.
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These scenarios demonstrate how key input parameters alter your calculation outcome.
With $100k annual income ($8,333/month gross), the conventional 28/36 rule suggests a maximum housing payment of about $2,333/month (28% front-end). At current rates (6-7%), that supports a loan of roughly $350,000–$380,000. Adding a down payment of $120,000–$150,000 would be needed to reach a $500k purchase price. Use our house affordability calculator to test your exact down payment, debt, and rate scenario.
The 28/36 rule is the conventional lending standard: your front-end DTI (housing payment ÷ gross monthly income) should not exceed 28%, and your back-end DTI (total monthly debt ÷ gross monthly income) should not exceed 36%. If your existing monthly debt is $500, the back-end ratio becomes the binding constraint because it leaves less room for the new mortgage payment.
Monthly debt payments (car loans, student loans, credit cards) directly reduce the housing payment you can afford under the back-end DTI. For example, with $800/month in existing debt at the 36% back-end limit on a $6,000/month income, only $1,360/month remains for housing (36% of $6,000 = $2,160 total debt capacity minus $800 existing debt). Reducing or paying off debt before applying for a mortgage can significantly increase your home buying power.
FHA loans allow higher DTI ratios: 31% front-end and 43% back-end versus conventional 28/36. This makes FHA accessible for buyers with higher debt loads or smaller down payments (as low as 3.5%). However, FHA requires mortgage insurance premiums (MIP) for the life of the loan or at least 11 years, which adds to the monthly cost. Conventional loans typically require 20% down to avoid PMI but offer more flexibility in other areas.
For a $400,000 home with 20% down ($80,000), the loan amount is $320,000. At 6.75% over 30 years, the principal and interest is about $2,075/month. Adding property taxes ($400/month) and insurance ($125/month) gives a total PITI of roughly $2,600. Under the 28% front-end rule, you need gross monthly income of at least $9,286 ($111,429 annually). Under the 36% back-end rule with no other debt, the same $2,600 payment requires $7,222/month ($86,666 annually). The higher of the two is the safe benchmark.
Yes. HOA fees, along with property taxes, homeowners insurance, and the principal and interest payment, are all included in the front-end DTI calculation. Lenders review the total monthly housing obligation — often called PITI (Principal, Interest, Taxes, Insurance) plus HOA — to ensure it stays within the front-end ratio limit.
Conventional loans almost never exceed 36% back-end DTI, and most automated underwriting systems cap out around 43-45%. FHA allows up to 43% in most cases, and VA allows up to 41% (with compensating factors). Some portfolio or non-QM lenders may go higher, but they charge significantly higher rates and require larger down payments. If your DTI is above 43%, focus on paying down debt before applying for a mortgage.