House Affordability Calculator

What are the front-end and back-end DTI tests every lender runs?

A debt-to-income ratio (DTI) is monthly debt payments divided by gross monthly income. Lenders run two at once. The front-end (housing) ratio covers only the proposed housing payment — principal, interest, property tax, insurance and HOA. The back-end ratio covers every monthly debt payment, the new mortgage included. Both must pass.

Common reference points: 28 % front-end and 36 % back-end for conventional loans (the defaults here), 31 % and 43 % for FHA manual underwriting, and up to 50 % back-end under Fannie Mae's automated underwriting for strong files. Since 1 October 2022 a Qualified Mortgage has no fixed 43 % cap — the CFPB's General QM rule replaced it with a price test — but most borrowers above about 43 % find themselves stretched. Both targets are adjustable.

The binding constraint is whichever test gives the lower price for your income, debts, down payment, rate and local costs. With little existing debt the front-end limit usually binds; with significant debts the back-end limit does. The calculator names the one that bound your result and shows both prices.

What counts as a monthly debt, and what does not?

Lenders include the minimum required payments on credit cards, installment loans (auto, personal, student), other mortgages and any lease on your credit report. They do not count utilities, phone bills, subscriptions, groceries or insurance premiums — and not your current rent, because the new mortgage replaces it. Only payments a lender can see count.

Student loans in deferment or forbearance still count. Fannie Mae Selling Guide B3-6-05 has lenders use 1 % of the outstanding balance as the monthly payment when the actual payment is zero, so enter that 1 % figure in the monthly-debts field if your loans are deferred.

Child support and alimony orders count as debts. Self-employment and commission income are usually averaged over two years of tax returns — the lender's process, not this calculator's. Enter the gross income you can document.

What do the comfortable, stretch and over-the-limit prices mean?

The headline is the highest price your two DTI targets allow at the inputs you entered — the band calls it "Stretch", because buying there leaves no buffer for a repair, a job change or a property-tax rise. "Comfortable" is 90 % of it; at the first worked example that keeps back-end DTI at 31.6 % instead of 34 %.

The third card, labelled "Maximum", is 110 % of the headline: it shows what going beyond your targets would cost each month and flags that it exceeds them. The band is not a recommendation; it shows the trade-off between more home and a smaller buffer. A lender's approval may be lower or higher depending on credit score, loan type, reserves and compensating factors.

How do property tax, insurance, PMI and HOA change your maximum price?

These fixed monthly costs come off the housing budget before anything is left for principal and interest, so every dollar of them lowers the loan you can carry. A 1.2 % property-tax rate on a $400,000 home is $400 a month, taken from the budget before the payment calculation even starts. Enter your local figures in Advanced.

PMI applies when the down payment is under 20 %. The default 0.85 % of the loan a year is a mid-range assumption; quotes run from about 0.2 % (excellent credit, nearly 20 % down) to 1.5 % or more (lower scores, 3 % down). It can be cancelled at 80 % LTV and ends automatically at 78 % under the Homeowners Protection Act; the calculator charges it for the whole first-year payment it solves.

HOA dues are a hard monthly cost the lender counts dollar for dollar in the housing ratio. In condo and planned-community markets they can be the biggest reason the price you can afford is below what you expected.

What mistakes do buyers make, and what can this calculator not tell you?

The most common mistake is using take-home pay instead of gross income. Every DTI ratio uses income before federal and state tax, FICA and pre-tax deductions, so a $5,000 monthly paycheck may mean $7,000–$8,000 of gross income. The second is leaving debts out: every minimum payment on your credit report belongs in the debts field.

One $400 car payment, for example, removes $400 from the back-end budget; when the back-end limit binds, that lowers the maximum price by about $60,000 at 7 % with 10 % down and 0.85 % PMI.

What the calculator cannot tell you: whether your credit score earns the rate you entered, which program (FHA, VA, conventional, USDA) fits, the lender's fees and points, or whether you have the reserves lenders want (often two to six months of payments). Only a pre-approval from a licensed lender, based on your credit file and documents, is definitive.