What the Mortgage Affordability Calculator does
This calculator tells you the most expensive home your income can support: it takes your income, existing monthly debts, deposit and the interest rate on offer, applies the debt-to-income limits lenders use, and works backwards to the largest loan and price that fit. It also shows which limit is holding you back, so you know whether more income, less debt or a bigger deposit would move the answer.
The default rule is the traditional US 28/36 convention - housing costs no more than 28% of gross monthly income, all debts together no more than 36%. You can switch to the FHA benchmarks (31/43), to an Indian FOIR-style rule (one cap on all EMIs, measured against take-home pay, with the RBI loan-to-value tiers), or type your own ratios. Everything is calculated in your browser; nothing you enter is sent anywhere.
How to use it
- Choose the lending rule closest to where you are borrowing. The ratios fill in automatically and you can still change them under "Ratios, mortgage insurance and loan-to-value".
- Enter household income - gross (before tax) for US rules, take-home for the FOIR rule - and the monthly payments on debts you already have: car loans, student loans, card minimums and other EMIs.
- Enter your deposit, the interest rate and the term you have been quoted, then property tax (as a percentage of the price or a yearly amount), home insurance and any HOA or maintenance charge.
- Read the maximum price at the top, then the finding underneath that names the limit holding you back and why. The bars show the price each limit on its own would allow; the shortest bar is the answer.
- Type a listing price into "Check a specific price" to see the monthly cost and both ratios for that home.
Reading the results
The maximum price is a ceiling from the lender's point of view, not a budget. It assumes you are comfortable spending the whole allowed share of income on housing, every month, for the whole term.
If the front-end ratio is the limit, your other debts are modest and only income, the rate or the running costs of the home change the answer. If the back-end ratio is the limit, every unit of monthly debt you clear raises the housing payment you can carry by the same amount. If the loan-to-value cap is the limit, your income would support more and the deposit is the constraint.
Mortgage insurance appears only while the loan is above 80% of the price. Near that boundary the answer can jump: a slightly smaller loan that avoids insurance may be the best you can do, and the calculator stops at exactly 80% when that happens.
The cash-needed figure adds the closing-cost percentage to your deposit. Those costs are not borrowed here, so make sure you have them on top of the deposit.
Worked example: a US household on $110,000 a year
Gross income of $110,000 is $9,166.67 a month. Under 28/36 housing may take 28% = $2,566.67, and all debts 36% = $3,300.00. With $450 of existing debt payments, the back-end limit leaves $2,850 for housing, so the front-end figure of $2,566.67 is the tighter one.
The loan is 6.5% over 30 years, so each $1 borrowed costs $0.0063207 a month (that is $632.07 per $100,000). Property tax is 1.1% of the price a year, insurance $1,500 a year ($125 a month), and with a $40,000 deposit (under 20%) mortgage insurance of 0.5% of the loan a year applies.
Take off the insurance and the tax on the deposit part of the price: $2,566.67 - $125 - $36.67 = $2,405.00. Each $1 of loan costs $0.0063207 + $0.0009167 tax + $0.0004167 mortgage insurance = $0.0076540 a month, so the loan is $2,405.00 / 0.0076540 = about $314,214.
The maximum price is $314,214 + $40,000 = $354,214. The monthly cost is $1,986.05 principal and interest, $324.70 tax, $125 insurance and $130.92 mortgage insurance - $2,566.67 in total, exactly 28% of income - and total debts come to 32.9% of income, inside 36%. With 3% closing costs you need about $50,626 in cash.
Formulas and scoring rules
- Monthly payment per unit of loan
k = r / (1 - (1 + r)^-n), r = annual rate / 12, n = years x 12The standard annuity formula (spreadsheet PMT). At 0% it is 1 / n.- Housing budget from each ratio
front budget = income x front%; back budget = income x back% - other debtsMonthly income: yearly income / 12.- Monthly housing cost at loan L
cost = L x k + tax% x (L + deposit) / 12 + insurance / 12 + HOA + PMI% x L / 12 (PMI only while L / price > 80%)- Largest loan within a budget
L = (budget - fixed costs - tax% x deposit / 12) / (k + tax% / 12 + PMI% / 12)Solved for both the with-insurance and without-insurance cases; the answer is the larger self-consistent one, or exactly 80% LTV at the boundary.- Loan-to-value cap
L <= LTV x deposit / (1 - LTV)RBI tiers: 90% for loans up to Rs 30 lakh, 80% up to Rs 75 lakh, 75% above.- Maximum price
price = min(L over all limits) + depositFigures are shown rounded to whole currency units; nothing is rounded during the calculation.
Where 28/36, 31/43 and FOIR come from
Debt-to-income ratios are underwriting conventions. The 28/36 pairing is the long-standing rule of thumb for US conventional loans; the US Consumer Financial Protection Bureau explains the back-end ratio as all monthly debt payments divided by gross monthly income. FHA guidance uses higher benchmarks of 31% and 43% for manual underwriting, and automated underwriting can approve higher ratios still when the rest of an application is strong.
Indian lenders usually look at a fixed obligation to income ratio (FOIR): the total of all EMIs, including the new home loan, as a share of net monthly income. The share commonly sits between 40% and 60% depending on the lender and the income band, so 50% is a middle setting, not a rule. The loan is also limited by loan-to-value: the tiers built in here are the RBI ones of 90%, 80% and 75% by loan size.
Limitations: what the result does not prove
- Lenders also look at credit history, job stability, savings and the property itself. Passing these ratios does not mean you will be approved, and a lender may lend you less - or, with automated underwriting, more.
- Property tax, insurance, HOA fees and mortgage-insurance rates vary by place and lender. Use figures from your own quotes; the defaults are illustrations.
- The interest rate is assumed fixed for the whole term. With a variable rate, the payment and therefore the ratios can rise later.
- It does not tell you what is sensible for your household. Childcare, saving for retirement and an emergency fund are not in any lender ratio, and many people choose to borrow well below the maximum.
- Taxes on the purchase (stamp duty, registration, transfer tax) differ by country and state and are only covered through the closing-cost percentage you enter.
Privacy: where your data goes
Everything you paste, type or drop is processed in this browser tab. It is not uploaded, logged, stored or sent to analytics. Session recording and tag-manager scripts are switched off on this page.
Standards and sources
- CFPB - What is a debt-to-income ratio?
- HUD - Single Family Housing Policy Handbook 4000.1
- Reserve Bank of India - Individual Housing Loans: Risk-Weights and LTV Ratios
- CFPB - Owning a Home: explore interest rates and loan costs
Frequently asked questions
How much house can I afford on my salary?
Under the 28/36 rule, housing costs can take up to 28% of your gross monthly pay. On $100,000 a year that is $2,333 a month for the loan payment, property tax and insurance together. The calculator turns that budget into a price using your rate, term and deposit, then checks your other debts against the 36% limit.
What is the 28/36 rule for mortgages?
It is a lending rule of thumb: spend no more than 28% of gross monthly income on housing (mortgage payment, property tax, insurance, HOA) and no more than 36% on all debts including the mortgage. It is a convention used in US conventional lending, not a law, and lenders can go above it.
How much house can I afford with a $200k salary?
$200,000 a year is $16,667 a month, so the 28% front-end limit allows about $4,667 a month of housing cost. At 6.5% over 30 years with 1.1% property tax, $1,500 insurance and a 20% deposit, that supports a price of roughly $760,000 (about $152,000 deposit) if you have few other debts - enter your own figures for the exact answer.
What is FOIR and how is it different from DTI?
FOIR (fixed obligation to income ratio) is how most Indian banks size a home loan: all EMIs, including the new one, divided by take-home monthly income, usually capped somewhere between 40% and 60%. US DTI ratios use gross income instead and split housing from other debts. Pick the India preset to apply FOIR.
Does paying off my car loan increase how much house I can afford?
Only when the back-end ratio is the limit. If it is, every unit of monthly debt you remove adds the same amount to the housing payment you can carry, which can raise the price considerably. If the front-end ratio is the limit, clearing other debts does not change the maximum price at all.
Why does a bigger deposit raise the price by more than the deposit itself?
A deposit adds to the price directly, and if it takes the loan below 80% of the price it also removes mortgage insurance from the monthly cost, freeing budget for a bigger loan. Where a loan-to-value cap is the limit, each extra unit of deposit also unlocks several units of loan.
Should I borrow the maximum the calculator shows?
Not necessarily. The figure is what lending conventions allow, not what fits your other plans. Leaving room for savings, repairs and a rate rise is common advice; checking a lower price with the "check a specific price" box shows how much breathing room each step down gives you.
Last reviewed by the A2Z.Tools team against the sources listed above.
