Affordability Calculator
Find out how much house you can afford based on your income and debts
Maximum
Comfortable
Understanding DTI Ratios
Front-End Ratio: Maximum percentage of income that can go toward housing costs (P&I, taxes, insurance). Standard limit is 28%.
Back-End Ratio: Maximum percentage of income for all debt payments including housing. Standard limit is 36%.
Lenders typically use the more restrictive of these two ratios to determine your maximum loan amount.
How the Affordability Calculator Works
Understanding your home buying power starts with Debt-to-Income (DTI) ratios.
DTI Ratios Explained
Lenders look at two key numbers to decide how much you can borrow: the 'front-end' and 'back-end' ratios.
- Front-End Ratio: Percentage of income spent on housing (Standard: 28%).
- Back-End Ratio: Percentage of income spent on ALL debt (Standard: 36%).
- The calculator uses the stricter of these two limits.
The Goal of the Iterative Solver
Calculating affordability is complex because taxes, insurance, and PMI depend on the home price, which is exactly what we're trying to find.
- The calculator starts with a rough guess of the home price.
- It computes the total monthly payment including taxes and PMI.
- It repeatedly adjusts the price until the calculated payment matches your DTI limit.
Comfortable vs. Maximum
Just because a lender says you can afford a certain amount doesn't mean you should spend it. We provide a 'Recommended' price to ensure financial flexibility.
- Maximum Price: The literal limit of what a lender might approve.
- Comfortable Price: 80% of the maximum price, leaving room for life's other expenses.
- Remember to account for closing costs (3-5% of the home price) which aren't in this calculation.