Mortgage Affordability Calculator

What Is Mortgage Affordability?

Mortgage affordability is the maximum home price a lender will approve based on your income, existing debts, and down payment — not what feels comfortable month to month. Lenders use two debt-to-income tests, called the 28/36 rule, to set this ceiling. Understanding how they work puts you in control of the conversation before you walk into a bank.

How to Use the Mortgage Affordability Calculator

1. Enter your gross annual income — your pre-tax salary plus any reliable bonus or side income.
2. Add up monthly debts — auto loans, student loans, credit card minimums, child support. Skip anything that will be paid off before closing.
3. Set your down payment — cash on hand for the deposit. A larger down payment unlocks a higher home price.
4. Pick your interest rate and term — use a current rate quote from your lender, or the prevailing 30-year rate as a baseline.
5. Read the results — the Maximum Home Price is your affordability ceiling, Max Monthly Payment is the housing budget, and DTI Ratio shows how close you are to lender limits.

The 28/36 Rule

Most US lenders apply two debt-to-income tests:

• Front-end ratio — housing payment ÷ gross monthly income ≤ 28%
• Back-end ratio — (housing + other debts) ÷ gross monthly income ≤ 36%

The smaller of the two ceilings becomes your maximum monthly payment. We then back-solve the loan principal using the standard amortization formula and add your down payment to get the maximum home price.

$$P = \text{PMT} \times \frac{(1+r)^n - 1}{r \times (1+r)^n}$$

Where P is principal, r is the monthly interest rate, and n is the number of monthly payments.

Benefits of Using This Calculator

• Instant, free affordability check — no appointment, no credit inquiry, no email required.
• Multi-currency — works for property markets in the US, UK, UAE, Australia, Canada, and more.
• Shows the binding constraint — tells you whether your income or your existing debts are limiting your borrowing power, so you know exactly what to fix.
• AI-powered narrative — the "Explain with AI" button gives a personalised explanation of your DTI profile and actionable steps to increase your maximum home price.
• Downloadable PDF — share a formal summary with a mortgage broker or financial advisor.

Common Mistakes Buyers Make

1. Using net income instead of gross — lenders always calculate DTI on pre-tax gross income. Entering your take-home pay will make the calculator underestimate your borrowing power.
2. Forgetting existing monthly debts — your car payment, student loan minimum, and credit card minimums all count against your back-end DTI. Missing even one skews the result.
3. Treating the maximum as a target — the calculator outputs a lender ceiling, not your comfort zone. Most financial planners suggest staying 10–20% below the maximum to leave room for repairs, insurance increases, and life events.
4. Ignoring property taxes and insurance — this calculator shows principal and interest only. Real-world PITI (principal, interest, taxes, insurance) typically adds 15–25% to your monthly cost.
5. Not stress-testing the rate — run the calculator at your quoted rate, then at +1% and +2%. If the result at +2% is unaffordable, you may be over-stretching on an adjustable-rate mortgage.