Mortgage Affordability Calculator

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.

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.

Borrower-paid PMI commonly applies to conventional loans above 80% loan-to-value, although lender-paid insurance and other loan structures differ. This calculator adds PMI at the rate you enter (default 0.5% annually) whenever modeled LTV is above 80%. Under the federal Homeowners Protection Act, eligible borrowers can generally request cancellation when the scheduled balance reaches 80% of the home's original value, subject to payment history and other conditions. Automatic termination generally occurs at 78% of original value when the loan is current. Appreciation-based cancellation follows the servicer's rules.

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.

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.