Mortgage Affordability Calculator

“Mortgage Affordability” is the maximum home loan amount you can comfortably pay back each month without straining your finances. It depends on your monthly income, existing debts, down payment, and interest rate. Lenders typically use a debt-to-income (DTI) ratio to gauge if you can handle mortgage payments along with other obligations.

Your DTI ratio compares monthly debt payments to monthly income. Banks use it to see if you have enough free cash flow to handle a new mortgage. A lower DTI indicates lower financial stress and a higher likelihood of loan approval. Most lenders prefer a DTI below 36–43%.

A larger down payment reduces the loan principal, lowering your monthly payment and total interest cost. It can also help you avoid private mortgage insurance (PMI), making homeownership more affordable over the life of the loan.

Absolutely. A lower interest rate means lower monthly payments, allowing you to afford a higher principal. Meanwhile, a longer loan term (e.g., 30 years) spreads payments out more, also increasing affordability. However, a longer term adds more total interest cost.

Mortgage payments often include property taxes and homeowner’s insurance (and possibly HOA fees). Our calculator optionally factors in rough estimates to give a more realistic monthly cost. The final numbers might vary by location and policy.

This is just an estimate. Actual mortgage approvals depend on your credit score, job history, lender-specific rules, and more. Use the result to plan or compare, but always confirm with a qualified lender or mortgage advisor.

Our “Copy” button compiles your monthly income, debts, estimated mortgage details, and return on equity (approx.) into a short text summary. You can paste it into an email or note for personal reference or share it with realtors and lenders.

Your credit score plays a major role in mortgage affordability by influencing your interest rate. Higher scores qualify for lower interest rates, reducing monthly payments and increasing the loan amount you can afford. Lower scores may result in higher rates, making the mortgage more expensive over time.

🔹 Credit Score vs. Mortgage Rate:

Raising your credit score before applying for a mortgage can save thousands in interest over the loan's lifetime.

The 28/36 Rule is a general mortgage affordability guideline:

• 🏡 Housing Costs (28%) – Your mortgage should not exceed 28% of your gross income.
• 📉 Total Debt (36%) – All debt payments (mortgage + car loan + student loans, etc.) should not exceed 36%.

🔹 Example Calculation:

• If your annual income = $80,000, your max mortgage payment should be $1,867/month.
• If your total debts = $800/month, your max mortgage affordability is $1,267/month.

Use our Mortgage Affordability Calculator to apply this rule to your specific income and debt situation.

Closing costs are additional fees paid at the final stage of purchasing a home, typically 2-5% of the loan amount. These affect affordability since you need to cover them out of pocket or roll them into the loan.

🔹 Typical Closing Costs:

• 📄 Loan Origination Fee – 0.5% to 1% of the loan.
• 🏡 Appraisal & Inspection Fees – $300 - $600.
• 📝 Title & Legal Fees – $1,000 - $2,000.
• 💰 Prepaid Property Taxes & Insurance – Varies.

If you’re tight on funds, negotiate seller-paid closing costs or explore loans with lower upfront fees.

The best mortgage type depends on your financial stability and risk tolerance:

🔹 Key Differences:

If you plan to stay in your home long-term, a fixed-rate mortgage is safer. If you’ll sell or refinance in a few years, an ARM might save you money initially.