Mortgage Affordability Calculator

How Much Mortgage Can You Afford?

Mortgage affordability depends on your income, existing debts, down payment, interest rate, and local property taxes and insurance. Enter your loan details in the calculator above along with any planned extra payments to see the payment structure and payoff timeline. Lenders use debt-to-income ratios to determine maximum loan amounts, but the lender maximum is often more than you should comfortably borrow. This tool helps you find the payment level that fits your budget with room for savings, emergencies, and quality of life.

The 28/36 Rule for Mortgage Affordability

Front-end ratio (28%): housing costs (PITI - principal, interest, taxes, insurance) should not exceed 28% of gross monthly income. Back-end ratio (36%): total debt payments (housing plus car, student loans, credit cards) should not exceed 36%. On $7,500 gross monthly income: max housing payment $2,100 (28%). If existing debts are $500/month: max total $2,700 (36%), housing limit $2,200. The more restrictive ratio controls. At 6.5% rate and 1.5% for taxes/insurance: the $2,100 housing budget supports approximately a $280,000 mortgage ($310,000 home with 10% down).

Affordable Mortgage by Salary Level

$60,000 salary ($5,000/month): max housing ~$1,400, max home ~$190,000-$210,000. $80,000 ($6,667): max ~$1,867, home ~$260,000-$290,000. $100,000 ($8,333): max ~$2,333, home ~$330,000-$370,000. $120,000 ($10,000): max ~$2,800, home ~$400,000-$450,000. $150,000 ($12,500): max ~$3,500, home ~$510,000-$570,000. These ranges assume 10% down, 6.5% rate, 1.2% property tax, and no significant existing debt. Each $500/month in existing debt reduces the affordable home price by approximately $40,000-$50,000 because that debt consumes DTI capacity.

Down Payment and Its Effect on Affordability

More down payment means smaller loan, lower payment, and potentially better rates. On a $350,000 home at 6.5%: 5% down ($17,500): loan $332,500, payment $2,102 + PMI $166 = $2,268. 10% ($35,000): loan $315,000, payment $1,991 + PMI $131 = $2,122. 20% ($70,000): loan $280,000, payment $1,770, no PMI = $1,770. The $498/month difference between 5% and 20% down redirects $5,976/year from housing cost to other financial priorities. The 20% threshold eliminates PMI entirely, producing the largest single payment reduction. If reaching 20% requires years of additional saving, the 10% option with PMI may be the better trade-off to start building equity sooner.

Property Tax and Insurance: The Hidden Payment Components

Many first-time buyers focus on the mortgage payment and overlook taxes and insurance, which add $400-$1,000+ per month. On a $350,000 home: property tax at 1.2% = $350/month. Homeowner insurance = $150/month. PMI at 0.5% (if applicable) = $146/month. Total additions: $500-$646/month beyond P&I. A $1,770 P&I payment becomes $2,270-$2,416 PITI. At 28% DTI, the income needed to support $2,416/month: $8,629/month or $103,543 annual salary. Without taxes and insurance: $1,770 requires only $6,321/month ($75,857 salary). The $27,686 salary gap illustrates why these "hidden" components significantly restrict the affordable purchase price.

Comfortable vs Maximum Affordability

Lenders approve you for the maximum based on DTI ratios. The maximum is not the amount you should borrow. A $100,000 salary supports up to $370,000 at lender limits, but at that level: $2,333/month housing leaves $5,767 for federal/state tax ($1,750), retirement savings ($833), food ($600), transportation ($500), utilities ($250), insurance ($200), and everything else ($1,634 for all remaining expenses and savings). Targeting 20-22% of gross income for housing (rather than the 28% maximum) provides substantially more breathing room: $1,667-$1,833/month housing on $100,000 salary supports a $230,000-$260,000 mortgage, with $500-$666/month freed for savings, entertainment, and financial flexibility.

Dual Income vs Single Income Qualification

Two incomes of $60,000 each ($120,000 total): max home approximately $450,000. If one income is lost (job change, parental leave, disability): the remaining $60,000 supports only $210,000. Stress test: can you afford the mortgage on one income for 6-12 months? If not, the purchase is more fragile than DTI ratios suggest. Conservative dual-income buyers limit housing to an amount affordable on the lower of the two salaries, treating the second income as savings and investment acceleration rather than housing capacity. This approach survives income disruption without threatening the home.

Pre-Approval: Finding Your Actual Budget

A mortgage pre-approval provides a concrete maximum loan amount based on your actual financial profile (credit score, income, debts, assets). The process takes 1-3 days and involves a hard credit inquiry, income documentation, and asset verification. The pre-approval letter is valid for 60-90 days and strengthens purchase offers. Start the pre-approval process before house shopping to establish your real budget ceiling. Many buyers waste time viewing homes above their qualification range, creating disappointment and unrealistic expectations. A pre-approval letter also identifies potential issues (credit problems, documentation gaps) before you invest time and emotion into a specific property.

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