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Calculators

Home Affordability Calculator

Works backwards from your income and existing debts to the home price at your DTI limit.

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  • Sent to Samantha only if you choose
  • 5.0 on Google, 128 reviews

Home price at your debt-to-income limit

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$/mo
Car loans, student loans, minimum credit card payments, child support. Not rent.
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43% is a common ceiling. Some programs go higher with strong credit or reserves.
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A planning figure, about 0.5% of the price a year. Use your insurance agent's quote.

About 1.5% of the price at Michigan's statewide median homestead rate, the year after the sale. Get the published rate for an address

Home price at your DTI limit
$0
home price
Payment at your DTI limit
$0
Estimated loan amount
$0
Principal & interest
$0
Tax + insurance
$0
PMI, standard coverage estimate
$0
Get pre-approved Talk with Samantha

A ceiling, not a target. What you are comfortable paying matters more than what a lender allows.

Estimates only, for illustration. Not a loan commitment, an offer of credit, or a rate quote. Actual figures depend on underwriting, credit, income, assets, appraisal and property eligibility. Align Lending LLC, NMLS #2041154, is an independent mortgage broker and does not lend directly. Equal Housing Opportunity.

Before you pick a price

In Samantha's words

The better question

“Instead of saying, ‘Here's the biggest mortgage you can get,’ I'll ask, ‘What monthly housing expense feels comfortable to you?’ That's a much better conversation.”

Two numbers, both matter

“They think affordability is one number somebody else gives them. It's not. There's a qualification calculation and then there's your real life. Both matter.”

How to use a home affordability calculator

What it works out

Most calculators start with a price. This one starts with you: your gross income, the monthly debts you already pay, your down payment, a rate you pick and the debt-to-income limit you set. It then finds the highest price whose full housing payment fits inside that limit: principal and interest, property tax, insurance, and PMI when the loan is more than 80% of the price.

Try a lower limit too. The price at a payment you would be comfortable with is usually the more useful number.

Affordability formula

Maximum housing payment = monthly gross income × your debt-to-income limit − monthly debts

That is the back-end ratio. The price is the highest one whose full housing payment fits.

Example, for illustration: on a gross income of $96,000 a year and a 43% limit, every monthly debt payment and the new housing payment together stay within 43% of the monthly income, so each dollar of car or card payments leaves a dollar less for housing. Arithmetic on a ratio, not an approval amount or an offer.

Affordability terms

  • Debt-to-income ratio (DTI): The share of your gross monthly income that goes to debt payments, the new housing payment included.
  • Front-end DTI: The housing payment alone, as a share of gross income.
  • Back-end DTI: The housing payment plus every other monthly debt payment, such as car loans, student loans, credit card minimums and child support, as a share of gross income.
  • Gross monthly income: Income before taxes and deductions. Lenders count income they can document and expect to continue.
  • Compensating factors: Strengths in a file, such as cash reserves or a long record of on-time payments, that some programs weigh when a ratio runs above their usual limit.
  • Price ceiling: The home price that payment supports with your down payment and the rate you pick. Closing costs come on top of the down payment.

Common questions

If yours is not here, ask Samantha. She would rather you ask than guess.

What income and debts count for DTI?

Lenders count gross income they can document, such as salary, bonuses, commissions and self-employment income. The debts are recurring monthly payments: credit card minimums, auto loans, student loans, child support and similar obligations. Utilities, phone bills and groceries are not part of DTI, but they still have to fit your budget.

Many programs look for a DTI of 43% or less. With compensating factors, conventional loans can go to about 50% and FHA loans up to 57%.

It depends on the loan. VA loans have down payment options for eligible veterans, USDA loans for homes in eligible areas, and Fannie Mae’s HomeReady and Freddie Mac’s Home Possible are conventional programs built for buyers with a small down payment. A smaller down payment on a conventional loan usually adds PMI, which this calculator includes.

The monthly payment counts toward your back-end DTI like any other debt. If the payment is deferred or on an income-driven plan, each loan program has its own rule for the figure it counts, so enter the payment on your statement and ask Samantha which figure your program would use.

Yes. Private Mortgage Insurance (PMI) increases monthly payments and reduces your maximum affordable loan amount for conventional loans. This calculator adds a standard planning figure for it when the loan is more than 80% of the price. VA and USDA loans have no PMI; VA charges a one-time funding fee and USDA its own upfront and annual fees instead.

Lenders usually average commissions, bonuses and overtime over the last two years and look for signs the income will continue. Enter that average here rather than one strong year.

Property taxes vary by city or township and school district, and insurance by the home and the insurer. In Michigan the tax also changes after you buy: the year after a Michigan home sells, its taxable value resets to half of the assessor’s market value, so the seller’s tax bill is not your tax bill. Our Michigan property tax calculator gives the published rate for an address.

Credit is not part of this calculator, which works from income, debts and the rate you pick. A score below 640 narrows the options and usually raises the rate, and each program and lender sets its own minimum. Samantha can go over which loans are worth looking at for your score.

A documented gift from a family member can go toward the down payment or closing costs on most loan programs, and a larger down payment raises the price this calculator shows. Each program has rules on who can give and how the gift is documented. Our guide to gift funds covers the letter.

Yes, once you know the payment you would be comfortable with. This calculator works only from the figures you type. A preapproval is a lender’s review of your credit, income, debts and assets, and sellers often ask to see one with an offer. Our guide to mortgage preapproval covers what it takes.

Loan options

Loans to look at next

Conventional Loan

Conventional loans can go to a debt-to-income ratio of about 50% with compensating factors.

About Conventional Loan

FHA Loan

FHA loans can go to a debt-to-income ratio of up to 57% with compensating factors.

About FHA Loan

HomeReady® and Home Possible®

Fannie Mae's and Freddie Mac's programs for buyers with income at or below 80% of the area median.

About HomeReady® and Home Possible®

USDA Loan

USDA loans are backed by the U.S. Department of Agriculture for homes in eligible rural and suburban areas.

About USDA Loan

What our clients say

5.0 on Google across 128 reviews

Individual experiences. Results vary.

Your ceiling is not your budget

The number above is what a ratio allows. Samantha starts from the payment you would be comfortable with and works back to a price, and if the answer is to wait, she will say that too.

Schedule a call with SamanthaCompare loan options
  1. 1

    Start from your comfortable payment

    What you would pay each month without stretching.

  2. 2

    Check what a lender would count

    Income, debts and credit, the way underwriting reads them.

  3. 3

    Leave with a price range

    And your next step, with no obligation to go further.

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Align Lending LLC, NMLS #2041154, is a mortgage broker. Samantha Shelton, NMLS 1647301. Equal Housing Opportunity. Licensed in Michigan, Ohio, North Carolina, Florida, Louisiana and Texas. Calculator results are estimates for illustration, based only on the figures you enter. They are not a credit decision, a preapproval, a commitment to lend, an offer of credit, or a rate quote.

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