$315,297
$252,237
$1,983.33
$2,550.00
28
%
36
%
$315,297
$252,237
$1,983.33
$2,550.00
28
%
36
%
The Mortgage Qualification Calculator estimates the maximum home price and loan amount you may qualify for based on your income, debts, and loan terms. Lenders use specific debt-to-income (DTI) ratios to determine how much you can borrow, and this calculator applies the same standards.
The two primary DTI ratios used by lenders are the front-end ratio (also called the housing ratio) and the back-end ratio (total debt ratio). The front-end ratio limits your total housing costs — including mortgage payment, property taxes, and insurance — to no more than 28% of your gross monthly income. The back-end ratio limits your total monthly debt payments (housing plus all other debts) to no more than 36% of gross income.
These ratios are guidelines used by conventional loan underwriters following Fannie Mae and Freddie Mac standards. Some loan programs are more lenient: FHA loans allow up to 31/43, VA loans focus mainly on the back-end ratio (up to 41%), and some lenders accept up to 50% back-end for borrowers with strong credit and reserves.
The calculator works backward from your income to determine the maximum monthly payment you can afford, then uses the amortization formula in reverse to calculate the maximum loan amount. It factors in property taxes and insurance to ensure the total housing cost stays within the 28% guideline.
Keep in mind that qualification is different from affordability. Just because you qualify for a large mortgage does not mean you should borrow that much. Many financial advisors recommend keeping housing costs to 25% or less of gross income for comfortable budgeting, and maintaining an emergency fund of 3-6 months of expenses before purchasing a home.
The calculator applies the 28/36 rule:
Max Housing Payment = Gross Monthly Income × 0.28
Max Total Debt Payment = Gross Monthly Income × 0.36
The binding constraint is: Max P&I = min(Max Housing, Max Total Debt − Existing Debts) − Taxes − Insurance
Max Loan is then calculated by inverting the amortization formula: L = PMT × [(1+r)n − 1] / [r × (1+r)n]
Max Home Price = Max Loan ÷ (1 − Down Payment %)
The max home price is the most expensive home you could qualify for with your current income and debts. The max monthly housing amount is the 28% front-end limit. If your existing debts are high, the back-end ratio (36%) may be the binding constraint, reducing your qualification amount. Lowering debts or increasing your down payment increases your buying power.
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With $85K income, you can qualify for approximately a $328,000 home.
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Results
With $120K income and no debts, qualification increases significantly.
The 28/36 rule states that housing costs should not exceed 28% of gross income (front-end ratio) and total debt payments should not exceed 36% (back-end ratio). These are guidelines, not hard rules.
Monthly debts include car payments, student loans, credit card minimums, personal loans, child support, and alimony. Utilities, groceries, and insurance are not counted as debts.
Some loan programs allow higher ratios: FHA up to 31/43, VA up to 41% back-end, and some conventional lenders accept up to 50% with compensating factors like high credit scores or large reserves.
Credit score affects the interest rate you qualify for, not the DTI ratios directly. A higher score means a lower rate, which means a higher loan amount for the same monthly payment.
A larger down payment increases your buying power because the same loan amount buys a more expensive home. It also eliminates PMI if you put 20% or more down.
Lenders count base salary, bonuses (with 2-year history), overtime, commissions, rental income, investment income, and other documented recurring income. Self-employment income is averaged over 2 years.
Qualification maximums are often more than you should comfortably spend. Many financial advisors recommend spending no more than 25% of take-home pay on housing for a comfortable budget.
If your back-end ratio is the limiting factor, paying off debts increases your qualification amount. Paying off a $300/month car payment could increase your mortgage qualification by $40,000-$50,000.
Lenders count the actual monthly payment (or 1% of the balance for income-driven repayment plans) as a debt. Large student loan balances can significantly reduce mortgage qualification.
Yes. Adding a co-borrower's income increases qualification, but their debts are also counted. Both borrowers must meet credit score minimums.
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