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Tool: House Affordability Calculator (Mortgage, Income & Home Price) | Printed on:
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House Affordability Calculator (Mortgage, Income & Home Price)
Find your maximum home purchase price based on your income, debts, and the 28/36 rule.
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FINANCIAL ANALYTICS
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Income & Underwriting Inputs
The 28/36 Debt-to-Income Underwriting Rule
Transparent mathematical methodology explained in plain English.
Max Housing = min(GrossIncome × 0.28, GrossIncome × 0.36 - Debts) Lenders typically require your total housing payment (PITI) to not exceed 28% of gross monthly income, and total debts to not exceed 36%.
Variables Explained:
- GrossIncome: Total monthly household gross earnings.
- Debts: Monthly student loans, car payments, and minimum card payments.
Real Project Example
$95,000 Income with $500/mo Debts and $40,000 Down
Estimating max purchase price at 6.75% mortgage interest.
Sample Project Inputs:
Annual Income: $95,000
Monthly Debts: $500
Down Payment: $40,000
Rate: 6.75%
Step-by-Step Calculation:
- Monthly gross income: $95,000 ÷ 12 = $7,917.
- Front-end 28% max payment: $7,917 × 0.28 = $2,217.
- Back-end 36% max payment: ($7,917 × 0.36) - $500 = $2,350.
- Maximum allowable monthly housing payment: $2,217.
- Max loan supported (accounting for taxes and insurance): ~$295,000.
- Add $40,000 down payment.
Calculated Answer: Estimated maximum home purchase price of $335,000.
Knowledge Base
Frequently Asked Questions: House Affordability
Click any question below to expand quick answers, formulas, and expert tips.
Can I qualify for a loan with a DTI higher than 36%?
Yes. Many conventional loans allow back-end DTIs up to 43% or 45%, and FHA loans can sometimes approve DTIs up to 50% with strong compensating factors such as credit scores or cash reserves.