Using net income in one place and gross income in another
Lender-style DTI ratios are usually based on gross income. Mixing income definitions can distort the result.
Housing calculator
Home Affordability Calculator
Estimate a simplified home price range from income, recurring debts, down payment, mortgage assumptions, and a target debt-to-income ratio. This is a scenario calculator, not a lender approval tool.
Updated: June 10, 2026
Estimate home price range
Estimated affordable price—
Estimated loan amount—
Monthly housing payment—
Back-end DTI—
Front-end DTI—
Scenario comparison
Compare the target DTI result with more conservative and higher-ratio scenarios.
Conservative DTI—
Target DTI—
Higher DTI scenario—
Payment drivers
This insight updates after calculation.
Principal and interest—
Taxes, insurance, HOA—
How the calculation works
The calculator divides annual income by 12, applies the selected target back-end DTI ratio, subtracts existing monthly debt payments, then separates estimated property tax, insurance, and HOA dues from the principal-and-interest amount. The remaining principal-and-interest room is converted into a mortgage loan amount using a fixed-rate amortization formula.
In plain English, the model asks one question: after recurring debts and known housing add-ons are accounted for, how much monthly room is left for principal and interest? That payment room is then translated into a loan amount, and the down payment is added back to estimate a home-price range.
Formula
Maximum total housing room = gross monthly income × target back-end DTI − existing monthly debts. The calculator then subtracts estimated property tax, insurance, and HOA dues to estimate the principal-and-interest amount that can support a loan. Estimated price = estimated loan amount + down payment.
Maximum total housing room = gross monthly income × target back-end DTI − existing monthly debts
Estimated principal-and-interest room = maximum total housing room − property tax − insurance − HOA dues
Worked example
If income supports a $2,700 total debt limit under the chosen back-end DTI and existing debts are $450, the remaining housing room is $2,250. If taxes, insurance, and HOA dues total $475, the model leaves about $1,775 for principal and interest. That principal-and-interest amount is then translated into a loan estimate using the mortgage rate and term entered.
This is why affordability can move even when income stays the same. A higher rate, higher tax estimate, larger HOA dues, or shorter term can all reduce the home price the model supports.
How to interpret the result
A higher price estimate does not mean a lender will approve that amount or that the payment is comfortable. Use the output as a scenario range, then cross-check the monthly payment with the mortgage payment calculator, compare renting with the rent affordability calculator, and review debt pressure with the debt-to-income calculator.
Pay special attention to the gap between the back-end and front-end ratios shown on the page. A scenario can pass a chosen back-end ratio while still feeling too tight after groceries, childcare, transportation, utilities, repairs, and savings goals are considered.
Common mistakes when using an affordability estimate
Forgetting non-loan housing costs
Property tax, insurance, HOA dues, utilities, and maintenance can materially reduce what feels affordable in real life.
Treating the highest scenario as the target
A stretch ratio may be useful for comparison, but it does not automatically represent a safe or comfortable monthly budget.
What this estimate excludes
It excludes PMI, closing costs, reserves, credit rules, local taxes, lender overlays, maintenance, utilities, moving costs, and changing insurance or HOA dues.
It also does not know your cash reserves after closing, job stability, childcare changes, future repairs, rate locks, or product-specific lender rules. Those factors can change a real approval or a household comfort level even if the calculator output looks reasonable.
Scenario checklist before relying on the number
- Confirm gross income, recurring debt payments, and down payment are realistic.
- Check whether taxes, insurance, HOA dues, and PMI might be higher than the first estimate.
- Run a conservative DTI scenario, not only the target or stretch scenario.
- Compare the implied payment against actual cash flow after savings, maintenance, and irregular expenses.
- Verify any serious decision against lender disclosures and local housing costs.
Related calculators and guides
After estimating a range, test the monthly payment on the mortgage payment calculator, compare ownership with the buy vs rent calculator, review Home Affordability Explained for the plain-English walkthrough, and review the broader housing-cost breakdown in how mortgage payments work.
Affordability reality check
Result quality checklist
- Recheck property tax, insurance, and HOA assumptions with local listings or quotes.
- Compare the conservative scenario before planning around the target or stretch number.
- Leave room for utilities, repairs, maintenance, savings, and moving costs.
- Review whether gross-income DTI matches the underwriting rules you actually care about.
- Use lender disclosures separately if you are preparing for a real application.
Method and verification trail
- Method used: Gross monthly income is multiplied by the selected back-end DTI target, existing monthly debts are subtracted, then estimated taxes, insurance, and HOA dues are removed to estimate principal-and-interest room. That payment room is converted into a loan amount using a fixed-rate amortization formula.
- Primary source type to verify: Pay stubs, tax returns or qualifying-income records, current debt statements, mortgage-rate quotes, property-tax records, insurance quotes, HOA budgets, and lender disclosures.
- What to verify in real documents: Whether the income should be gross or qualifying income, what debts count toward DTI, realistic tax and insurance estimates, whether HOA dues apply, and whether the lender uses different front-end or back-end thresholds.
- Scope limit: This page does not replace underwriting, rate-lock quotes, escrow analysis, PMI modeling, or lender-specific approval rules.
For site-wide methodology, review How We Calculate. For sourcing and corrections standards, review Editorial Policy.
FAQ
Is this a mortgage approval estimate?
No. It is an educational affordability scenario, not a lender approval or prequalification decision.
Why include existing debts?
Existing monthly debts reduce the payment room available under a target back-end DTI ratio, which lowers the home price the model can support.
Should I plan around the highest number shown?
Usually not. A more conservative scenario often leaves more room for repairs, utilities, savings, and other household costs.
Before relying on this estimate
The result is an educational estimate based only on the inputs shown on this page. It can help compare assumptions and understand the formula, but it is not a recommendation, approval decision, credit counseling, legal advice, tax advice, or a guarantee.
Compare important results with official statements, disclosures, local rules, fees, and qualified professionals where needed. For a plain-English walkthrough, read Home Affordability Explained. Also review How We Calculate and the Disclaimer for more context.