How to estimate home affordability
Start with income and existing debts.
1
Enter gross income
Use stable household income before tax.
2
Add monthly debts
Include minimum payments on cards, car loans and student loans.
3
Choose a conservative DTI
Test 28% and 36% to see the range and keep a buffer.
What does this tool do?
Lenders cap total debt payments as a share of gross income. Subtracting existing debts leaves a housing payment, which converts into a loan and a purchase price.
The Formula
Max payment = Gross monthly income × DTI − Debts; Max price = Loan supported by that payment + Down paymentFrequently Asked Questions
Which DTI should I use?
A lower ratio leaves more room for rate rises and unexpected costs. Lenders often allow more than 36%, but the payment can become uncomfortable.
Does this include property tax and insurance?
The estimate leaves room for them inside the housing payment. Reduce the loan amount so taxes, insurance and HOA fit too.