Loan Affordability Calculator
Find out your maximum sustainable loan amount and home purchasing power. This calculator applies standard banking Debt-to-Income (DTI) underwriting guidelines to your monthly budget.
Pre-tax income from all reliable sources
Auto loans, student loans, credit card minimums
Max total debt service ratio (standard 36-43%)
Anticipated annual interest rate
Repayment period duration
Cash reserves allocated for down payment
Maximum principal lenders will approve
How to Use This Calculator
- Enter your gross monthly household income.
- Input ongoing monthly debt obligations (car payments, student loans, cards).
- Select the target debt-to-income (DTI) ratio (standard conventional is 36%).
- Specify expected loan interest rate and term.
- Enter your available down payment to view your maximum purchasing power.
Formula & Calculation Methodology
Underwriting limits debt servicing to a fixed fraction of gross earnings; loan ceiling is the discounted PV of allowable cash flow.
Worked Example
$8,000 monthly income, $600 debts, 36% DTI, 6.5% interest, 30 years, $50k down payment
Frequently Asked Questions
What is the front-end vs back-end DTI ratio?↓
Front-end DTI only measures housing costs (principal, interest, taxes, insurance), while back-end DTI includes all recurring personal debt obligations.
Can I qualify for a mortgage with a 45% DTI ratio?↓
Yes, government-backed programs like FHA loans and Fannie Mae automated underwriting frequently permit back-end DTIs up to 45% or 50% with compensating factors.
Does this calculation include property taxes and insurance?↓
This tool computes available payment headroom. To account for taxes and insurance, subtract estimated monthly escrow from the maximum allowable payment.
How can I increase my maximum borrowing capacity?↓
You can increase borrowing power by paying down existing credit card balances, adding a co-borrower, or securing a lower mortgage interest rate.
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Source Citation & Disclaimer
Informational tool only; not licensed tax, legal, or financial advice.