Finance
Mortgage Affordability Calculator
Find out how much home you can really afford. Apply standard US 28/36 underwriting (or FHA 31/43) with PMI, property tax, insurance, and HOA priced in.
Your finances
Max home price
$262,730
About $1,867 per month, all in.
Binding rule: front-end (housing-to-income).
Max loan principal
$212,730
Front-end max housing
$1,867
Back-end housing room
$2,100
Monthly payment breakdown
Principal and interest
$1,415
Property tax
$263
Insurance
$100
PMI
$89
Front-end ratio: 28.0% of gross. Back-end ratio: 32.5%.
Frequently Asked Questions about the Mortgage Affordability Calculator
What are the 28/36 rules lenders use?
The 28% front-end rule caps your housing payment (principal, interest, property taxes, homeowners insurance, PMI, and HOA) at 28% of gross monthly income. The 36% back-end rule caps all monthly debts combined, meaning housing plus car loans, student loans, and credit cards, at 36% of gross. Both limits apply at once, and whichever is tighter sets your ceiling.
How is FHA different from conventional underwriting?
FHA loans allow a 31% front-end ratio and a 43% back-end ratio, compared to conventional's 28/36. That extra headroom can add tens of thousands to your max home price. The trade-off is mandatory mortgage insurance: an upfront premium of 1.75% of the loan plus an annual MIP (around 0.55% for most loans) that does not auto-cancel the way conventional PMI does once you reach 80% LTV.
When does PMI apply and when can I drop it?
PMI applies on conventional loans when your loan-to-value ratio exceeds 80%, meaning a down payment below 20%. This calculator adds PMI at the rate you enter (default 0.5% annually) any time LTV is above 80%. Once your equity reaches 20% through payments or appreciation, you can request cancellation in writing, and federal law requires lenders to auto-cancel at 22% equity based on the original amortization schedule.
Why is the total monthly payment more than just principal and interest?
Lenders escrow property taxes and homeowners insurance monthly, and PMI is added whenever LTV exceeds 80%. HOA dues are separate but count against your housing budget too. On a $400,000 home in a typical US market, principal and interest might be $2,200 while taxes, insurance, and PMI push the real payment to $2,700 or more. This calculator models all five components so the affordability limit reflects your actual cash obligation.
Should I borrow the maximum I am approved for?
Usually not. Approval limits reflect the lender's risk tolerance, not your comfort level. The conservative profile (25/33) built into this calculator leaves room for retirement savings, emergency repairs, and interest rate changes. Buying at 70% to 80% of your maximum often makes the difference between a house that fits your life and one that consumes it, especially if income dips or a large repair hits in year two.