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How much house does your income support?
Enter gross annual income, the monthly debts a lender counts, your down payment, the rate and term you expect, and the debt-to-income ceiling you want to respect. The calculator turns those inputs into a monthly housing ceiling, an affordable loan amount and a home budget. Treat the result as a planning range rather than an approval.
Estimates principal and interest only; excludes taxes, insurance, HOA dues and fees. Not a pre-approval or financial advice.
From income to a monthly ceiling
The first step is a monthly income figure: annual income divided by twelve. From that, the chosen DTI ceiling sets how much of each month's gross pay can go to debt payments in total. Subtracting the debts already on your credit report leaves the housing payment the budget can carry.
A 36% ceiling is a common conservative starting point, but lenders set their own limits and may count taxes, insurance and association dues inside the housing ratio. The output is therefore a ceiling for planning, not a promise of approval.
Turning a payment into a loan
The affordable loan is the present value of a monthly annuity: the payment times one minus the discount factor, divided by the monthly rate. A higher rate shrinks the loan that the same payment supports, while a longer term raises it. Because the rate is entered as a nominal annual figure, it is divided by twelve before discounting.
Adding the down payment to the loan gives the home budget. The loan-to-income line shows how large the mortgage is relative to gross pay, and the down payment share shows how much of the purchase price comes from savings. Both are simple ratios for comparing scenarios.
Costs the budget leaves out
Property taxes, homeowners insurance, mortgage insurance, HOA dues, maintenance and closing costs are not in these outputs. In many markets they add a meaningful amount to the monthly outlay, so a realistic budget should reserve room for them and still pass the DTI test. Utilities and moving costs belong in the same reserve.
The calculator also assumes a fixed rate for the whole term and a fully drawn loan. Try a higher rate and a lower DTI ceiling to see how quickly the budget shrinks. Use the results as an educational estimate, not as financial advice or a lending decision.
Frequently asked questions
Does the DTI ceiling include the mortgage payment?
Yes. The ceiling applies to all monthly debt payments, so existing debts are subtracted first and only the remainder can go to housing.
Should I enter gross or take-home income?
Gross annual income, before tax, because lenders generally qualify borrowers on gross pay. Using take-home pay would make the budget more conservative.
Why is the loan-to-income figure so large?
It compares the mortgage alone with one year of gross income. A 30-year loan can easily be several times annual income, which is why the monthly payment and DTI ratio matter more.
Are taxes and insurance included?
No. The outputs cover principal and interest only. Add property tax, insurance, HOA dues and mortgage insurance separately before deciding what you can afford.