House Affordability Calculator

What formula does this tool use?

This tool uses max payment = income × DTI limit − other monthly debts, then converts that payment to a loan with the fixed-payment formula, loan = payment × (1 − (1 + r)^−n) ÷ r, where r is the rate ÷ 12 and n is years × 12. The maximum home price is that loan plus your down payment. On the starting values the payment is $2,020.00, the loan $303,621.29 and the price $343,621.29.

What does the Max Back-End DTI box do?

It sets how much of gross income the tool lets all monthly debt, including the new payment, take up. The tool applies exactly the percentage you type: 28 gives a $259,449.05 price on the starting values, 36 gives $343,621.29 and 43 gives $417,272.00. A value of 0, which is also what an emptied box becomes, leaves no room and returns an error rather than reverting to the starting value of 36.

Which housing costs are inside the payment?

Only principal and interest on the loan. Property tax, home insurance, HOA dues and mortgage insurance are not added, so the real monthly cost of the home at the displayed price will be higher. If you want the payment to cover them, lower the DTI percentage or reduce the income figure yourself; the tool has no field for them.

How is the down payment treated?

It is added to the loan to give the home price and does not change the loan size or the payment. With $100,000 down instead of $40,000, the loan stays at $303,621.29 and the price rises to $403,621.29. The tool shows the down payment as a share of the price (24.78% there) but applies no rule about loan-to-value or insurance.

How are the rate and term handled?

The rate is a fixed annual rate divided by 12 and compounded monthly, over years × 12 payments. A rate of 0% uses payment × months, so $1,400 over 15 years gives $252,000. A term that rounds to 0 months returns an error, and a negative rate is treated as 0. Real rates change daily and by lender, so the figure is only as current as the rate you type.

What is the “Income for Payment at 28%” line?

It is the annual income at which the maximum payment would equal 28% of gross income, calculated as payment ÷ 0.28 × 12. The 28% is a figure built into this tool, not a lending requirement. On the starting values it is $86,571.43, which you can compare with your own annual income of $84,000.

When does the tool show an error instead of a price?

When income is 0, when the loan term is under one month, or when existing debts already equal or exceed the DTI limit, leaving nothing for a payment. In the last case, no loan amount is possible at that limit however large the down payment is.

Is the result what a lender would approve?

No. It is arithmetic on your inputs only. Lenders also weigh credit history, savings, employment, property type and their own limits, and they price rates and fees that change. Closing costs, maintenance and moving costs are also outside the tool.