Home Buyer Affordability Calculator
Calculate how much house you can afford based on income, debts, and down payment
Your Financial Profile
Affordability Results
DTI Ratios
How Lenders Calculate Affordability
Lenders use debt-to-income ratios to determine how much they'll lend you. The front-end ratio compares your housing payment to gross income; the back-end ratio includes all monthly debt obligations. Conventional loans typically require a back-end DTI under 36%, though many lenders approve up to 45% with compensating factors like excellent credit or large down payments.
Pre-qualification is an informal estimate based on self-reported figures; pre-approval involves verified income, assets, and credit. In competitive markets, a pre-approval letter is often required to have an offer considered. Improving your buying power: pay down installment debt before applying, avoid opening new credit accounts, and consider a larger down payment to reduce the required loan amount.
Frequently Asked Questions
What is the 28/36 rule?
The 28/36 rule says your housing costs should not exceed 28% of your gross monthly income, and total debt payments should not exceed 36%. It's a guideline for conventional loans; FHA and VA loans are more flexible.
Does my credit score affect how much I can borrow?
Credit score affects your interest rate significantly. A 740+ score may get 6.5%, while a 620 score may see 7.5% or higher on the same loan. A 1% rate difference on a $300,000 loan adds $200+/month to payments.
Should I put 20% down?
20% down eliminates PMI (private mortgage insurance, typically 0.5–1.5%/year), but many buyers purchase with less. FHA allows 3.5% down, conventional allows 3–5%. Lower down payments mean higher monthly costs but preserve cash for emergencies.
What is PITI?
PITI stands for Principal, Interest, Taxes, and Insurance — the four components of your total monthly housing payment. Lenders use PITI in DTI calculations. HOA fees are sometimes added, making it PITIA.
How does pre-approval differ from pre-qualification?
Pre-qualification is a quick, informal estimate. Pre-approval involves verifying your income, employment, assets, and credit through documentation. Sellers take pre-approvals seriously; pre-qualifications carry little weight in competitive markets.
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