Mgage Affordability (Loans Category Version)

Mortgage affordability calculator for “how much house can I afford?”

This calculator estimates the maximum home price you can afford using a practical lending-style approach. It converts your monthly income and debt obligations into a maximum housing budget, then translates that budget into an estimated loan amount and home purchase price based on your interest rate and term.

The dominant use case is simple: you want a realistic upper limit before you browse listings, speak to an agent, or apply for a mortgage. The output is not a quote from a bank and it is not tailored underwriting. It is a fast, defensible estimate you can use to set a search range and avoid wasting time on homes that are obviously out of reach.

To use it, enter your gross monthly income and your required monthly debt payments (car loans, credit cards, personal loans, student loans, and any other fixed commitments). Then enter your down payment, interest rate, and loan term. If you know them, add property tax, insurance, and any HOA or levies. Those optional costs matter because lenders and your own budget must cover the total monthly housing payment, not only the mortgage principal and interest.

The calculator first estimates a maximum total housing payment using two common constraints: a housing ratio limit (front-end) and a total debt-to-income limit (back-end DTI). The housing ratio caps the housing payment as a percentage of gross income. The DTI cap limits total debt payments (housing plus other debts). The tighter of the two becomes your maximum total housing payment. From there, the calculator subtracts monthly taxes, insurance, and HOA costs to find the maximum principal-and-interest payment. Finally, it solves the standard mortgage payment formula in reverse to estimate the maximum loan amount and home price.

The primary results are the maximum affordable home price and the maximum loan amount. Supporting figures show the maximum allowed total housing payment, the portion reserved for taxes, insurance, and HOA, and the maximum principal-and-interest payment the mortgage itself can use. If the optional costs are high, your maximum loan amount can drop sharply even if your income is strong.

Assumptions and how to use this calculator

• Gross monthly income is used because many lending guidelines are expressed on a gross basis, even though your real budget is net of taxes and payroll deductions.
• The default housing ratio limit is 28% and the default back-end DTI limit is 36%. These are common rule-of-thumb limits, not a promise that every lender will use them.
• Property tax and homeowners insurance are treated as monthly costs (annual values divided by 12). If you leave them blank, they are assumed to be 0, which will overstate affordability.
• The result assumes a fixed-rate, fully amortizing mortgage over the full term. It does not model adjustable rates, interest-only periods, balloon loans, or changing payments.
• The home price estimate assumes your down payment is available as cash and does not include closing costs, prepaid escrow items, or lender fees, which can reduce what you can actually buy.

Common questions

Why does adding property tax or insurance reduce the home price so much?

Because lenders and your budget care about the total monthly housing payment. If taxes and insurance take a larger slice of the allowed housing payment, there is less room for the mortgage principal and interest. The loan amount is driven by that principal-and-interest payment, so the maximum loan can fall quickly.

Should I use gross income or take-home pay?

This calculator uses gross income to match common lending ratios. That is useful for “can I qualify” estimates. For “can I live with this payment,” you should also sanity-check using your take-home pay and a real monthly budget. If your deductions are high, the gross ratio limits can still produce an uncomfortable payment.

What counts as monthly debt payments?

Use the minimum required payments you must make each month: loan instalments, required credit card minimums, maintenance obligations, or any fixed commitments that reduce your borrowing capacity. Do not include discretionary spending like groceries or fuel; those belong in your personal budget, not the lender-style DTI calculation.

What interest rate should I enter if I am not pre-approved?

Use a realistic rate you expect to qualify for today, and run a second calculation with a higher rate as a stress test. Even a small rate increase can materially reduce the maximum loan amount, because the same monthly payment supports less principal when interest costs are higher.

Does this calculator tell me the “right” home price to buy?

No. It estimates an upper limit based on income and debt ratios. The “right” price depends on your lifestyle, savings rate, emergency fund, job stability, and tolerance for payment risk. If the maximum output feels tight, treat it as a ceiling and aim below it.