Home Affordability

The calculator starts from your gross monthly income and applies the 28% front-end DTI rule to find the maximum monthly housing payment you can carry. "Housing payment" here means PITI: principal, interest, property taxes, insurance, and HOA or maintenance fees. The front-end limit is what most conventional lenders use as their primary qualifying threshold.

From that maximum monthly payment, the calculator works backward to find the maximum home price. This requires an iterative solve: property taxes and insurance are percentages of home price, so the relationship is circular. The calculator runs a binary search until the monthly PITI at the derived price matches the DTI limit within a small margin of error. The result is the highest home price where your housing costs stay within the 28% guideline.

The back-end DTI check adds your existing monthly debt payments (car, student loans, credit cards) to the housing payment and compares the total against the 36% back-end limit. If your debts push the combined ratio over that threshold, the back-end limit becomes the binding constraint and the calculator shows the lower maximum.

Cash needed to close combines your down payment with estimated closing costs (typically 2–3% of purchase price). This number tells you the total cash you need in hand before you can complete a home purchase, separate from your monthly payment capacity.

The max home price is an affordability ceiling, not a recommendation. It tells you the highest price where a conventional lender would likely approve your application under standard guidelines. Many financial advisors recommend buying below your maximum. A more conservative target leaves breathing room for rate increases, unexpected repairs, or income changes. The front-end and back-end DTI percentages are shown explicitly so you can see how close you are to each limit.

The cash-needed-to-close figure is often the real constraint for first-time buyers. Even if your income supports a $400,000 purchase, coming up with $80,000–$92,000 in cash (20% down plus closing costs) takes years of saving. If your down payment is below 20%, remember to factor in PMI costs when evaluating total monthly payment affordability.