Affordability Calculator

This calculator uses the 28/36 rule, a widely accepted guideline that lenders use to evaluate mortgage applications. The rule sets two limits: your total housing costs (mortgage payment, property taxes, and insurance) should not exceed 28% of your gross monthly income, and your total debt payments should not exceed 36%.

The calculator takes the more conservative of these two limits to determine the maximum home price you can comfortably afford. This approach helps ensure you won't be stretched too thin financially after purchasing your home.

What Lenders Look At

Beyond the DTI ratio, lenders also consider your credit score, employment history, and savings. A higher credit score can qualify you for lower interest rates, which increases your buying power. Having reserves beyond your down payment demonstrates financial stability and can strengthen your mortgage application.

Tips for First-Time Buyers

If you're buying your first home, consider starting with a realistic budget based on this calculator, then exploring down payment assistance programs in your area. Many first-time buyer programs offer lower down payment requirements and competitive interest rates. Getting pre-approved before you start house hunting gives you a clear price range and shows sellers you're a serious buyer.