dopecalc

House Affordability Calculator

Determine the maximum home price you can afford using front-end (28%) and back-end (36%) debt-to-income ratios.

$
$
$
%

About this Calculator

Determine the maximum home price you can afford using front-end (28%) and back-end (36%) debt-to-income ratios.

Formula & Calculations

Formula

Front-End Ratio: P&I ≤ 28% of Monthly Income; Back-End Ratio: Total Debt ≤ 36% of Monthly Income; Max Price = Max Loan + Down Payment
Where:
  • AI=Annual gross income
  • MD=Total monthly debt payments (excluding future mortgage)
  • DP=Available down payment amount
  • i=Annual interest rate
  • n=Loan term in years
  • MP_front=Maximum monthly payment by front-end ratio (28%)
  • MP_back=Maximum monthly payment by back-end ratio (36% minus existing debts)

Assumptions

  • Lenders typically use 28/36 qualifying ratios for conventional loans.
  • Does not include property taxes, homeowners insurance, or HOA fees.
  • Assumes a fixed-rate mortgage for the entire term.
  • FHA loans may allow higher ratios (31/43); VA loans vary.

Calculation Examples

Example 1

Inputs:Income: $100,000/yr, Debts: $500/mo, Down: $60,000, Rate: 6.5%, Term: 30 years
Result:Max Home Price: ~$376,541, Max P&I: $2,333/mo

With $8,333 monthly income, 28% = $2,333 for housing. The back-end allows $2,500 after $500 debts. The front-end ratio is binding, capping P&I at $2,333.

Example 2

Inputs:Income: $75,000/yr, Debts: $800/mo, Down: $30,000, Rate: 7%, Term: 30 years
Result:Max Home Price: ~$235,996, Max P&I: $1,450/mo

Monthly income of $6,250 gives a front-end max of $1,750 and back-end max of $1,450 after debts. The tighter back-end ratio limits borrowing power.

Example 3

Inputs:Income: $150,000/yr, Debts: $200/mo, Down: $100,000, Rate: 5.5%, Term: 30 years
Result:Max Home Price: ~$738,747, Max P&I: $3,500/mo

With high income and low debts, the front-end 28% ratio ($3,500/mo) is the binding constraint, giving strong purchasing power.

Frequently Asked Questions

What is the front-end DTI ratio?

The front-end (or housing) ratio limits your total monthly housing payment to 28% of your gross monthly income. This includes principal, interest, property taxes, and insurance (PITI).

What is the back-end DTI ratio?

The back-end (or total) ratio limits all monthly debt payments including housing to 36% of your gross monthly income. This includes credit cards, car loans, student loans, and the new mortgage.