Question 1

How much house can I afford?

Accepted Answer

A common rule is the 28/36 rule: keep your housing costs (mortgage, tax, insurance, HOA) under 28% of gross monthly income (front-end DTI), and keep all monthly debts under 36% of gross monthly income (back-end DTI). This calculator uses both thresholds and shows you the more conservative limit.

Question 2

What is the 28/36 rule?

Accepted Answer

The 28/36 rule is a lending guideline used by conventional mortgage underwriters. The 28% limit covers housing expenses (PITI — principal, interest, taxes, insurance). The 36% limit covers all debt including housing, car loans, student loans, and credit card minimums. Lenders may allow higher ratios for well-qualified borrowers.

Question 3

What is front-end DTI vs back-end DTI?

Accepted Answer

Front-end DTI (housing ratio) is your total monthly housing payment divided by gross monthly income. Back-end DTI (total debt ratio) is all monthly debt obligations including housing divided by gross monthly income. Lenders use both; conventional loans typically require back-end DTI under 43-45%.

Question 4

Does a larger down payment help me afford a more expensive home?

Accepted Answer

Yes — a larger down payment reduces the loan amount, which lowers the monthly mortgage payment. This shifts more of your housing budget away from the mortgage and toward the purchase price itself. It may also eliminate PMI if your down payment reaches 20%, which further reduces your monthly cost.

Question 5

What other monthly costs should I budget for as a homeowner?

Accepted Answer

Beyond mortgage payment, property tax, and homeowners insurance, budget for: HOA dues if applicable, private mortgage insurance (PMI) if your down payment is less than 20%, utilities, and ongoing maintenance (typically 1-2% of home value per year). This calculator focuses on the costs lenders consider in qualifying you.

Question 6

What income is used to calculate home affordability?

Accepted Answer

Lenders use gross income (before taxes) from all verified sources: W-2 wages, self-employment income (averaged over 2 years), rental income, Social Security, and investment income. This calculator uses your total annual gross income divided by 12 for the monthly figure.

Question 7

Can I still qualify if my DTI is above 36%?

Accepted Answer

Many lenders allow back-end DTI up to 43% for conventional loans, and FHA loans can allow up to 50% in some cases with compensating factors like strong credit or large cash reserves. The 36% limit in this calculator is a conservative starting point, not an absolute ceiling.

Question 8

How does my credit score affect home affordability?

Accepted Answer

Your credit score determines the interest rate you qualify for, which directly affects your monthly payment and therefore how much home you can afford. A 760+ score typically gets you the best rate; below 620, conventional financing becomes difficult. A 1% difference in rate on a $400,000 mortgage equals roughly $230/month.

Home Affordability Calculator

Frequently asked questions