Mortgage Affordability Calculator

How this is calculated

⚠️ THIS TELLS YOU WHAT YOU CAN BORROW, NOT WHAT YOU SHOULD. The distinction matters more than any number here. A lender is underwriting the risk that you stop paying THEM; it is not asking whether you will be able to save, replace the car, take a holiday or absorb a broken boiler. Approval is a ceiling, not a target, and treating it as a target is the mechanism behind a great many miserable first years of homeownership. THE 28/36 RULE IS A CONVENTION, NOT A LAW. The front-end ratio says housing costs should not exceed 28% of gross monthly income. The back-end ratio says ALL debt payments together should not exceed 36%. These are long-standing conventional underwriting guidelines and they are widely varied from - FHA lending commonly runs nearer 31/43, and plenty of conventional loans are written above 43% back-end. Both percentages are inputs here for exactly that reason. Do not treat them as fixed physics. HOUSING COSTS MEANS PITI, NOT THE MORTGAGE. Principal, Interest, Taxes and Insurance - plus any HOA fee. People compare a rent figure against a principal-and-interest quote and conclude a house is cheaper than it is. On this default the taxes and insurance are a meaningful slice of the monthly cost, and they are the part that carries on rising after your rate is fixed. THE ARITHMETIC RUNS BACKWARDS from the payment, which is why it needs a little algebra rather than a simple division. Taxes and insurance scale with the HOUSE PRICE, but the loan is the price minus your deposit - so price appears on both sides. Solving for it gives: price = (payment - HOA + deposit x k) / (k + (tax rate + insurance rate) / 12), where k is the monthly payment per dollar borrowed, r / (1 - (1 + r)^-n). ⚠️ EXISTING DEBT IS FREE UNTIL SUDDENLY IT IS NOT, and this is the most useful thing on the page. The binding constraint is whichever ratio bites first. While the FRONT-END ratio is the binding one, another $100 a month of car payment costs you nothing at all in borrowing power. The moment your total debts push the BACK-END ratio below it, every further dollar of monthly debt costs you about 130 times its value in house price - on these defaults, $13,065 of house per $100 a month. There is a cliff, and people walk off it without noticing because the first few debts genuinely were free. WHICH MEANS PAYING DOWN THE RIGHT DEBT MATTERS ENORMOUSLY. If the back-end ratio is binding you, clearing a small high-payment debt before applying can buy more house than months of extra saving. If the front-end ratio is binding you, clearing that same debt buys nothing. The calculator shows both limits so you can see which one you are actually up against. WHAT THIS DOES NOT INCLUDE: PMI on deposits under 20%, closing costs, maintenance, or the reality that a lender also cares about credit score, employment history and reserves. Nor does it know your life. Treat it as the shape of the constraint, not as an offer.

Common questions

How much house can I afford?

On a $90,000 household income with $900 a month of other debt payments, a $40,000 deposit and a 6.5% rate: a lender is likely to approve up to about $268,000, on a monthly housing budget of $1,800 including taxes and insurance. But read that as a ceiling rather than a target - it is the most a lender will risk, calculated from its interests rather than yours.

Is the 28/36 rule a real rule?

It is a long-standing conventional underwriting guideline, not a law, and it is varied from constantly. The front-end ratio caps housing costs at 28% of gross monthly income; the back-end caps ALL debt payments at 36%. FHA lending commonly runs nearer 31/43, and plenty of conventional loans are written above a 43% back-end ratio. Both figures are inputs in this calculator precisely because they are conventions - if a lender has quoted you different ones, use theirs.

Why does my existing debt sometimes cost me nothing?

Because only one of the two ratios binds at a time, and this is the most useful thing on the page. Whichever limit is LOWER is the one actually constraining you. While the front-end ratio is binding, an extra $100 a month of car payment changes your borrowing power by exactly nothing. The moment your total debts drag the back-end limit below the front-end one, every further dollar of monthly debt costs you about 130 times its value in house price - on these defaults, $13,065 of house per $100 a month. It is a cliff, and people walk off it without noticing because the first few debts genuinely were free.

Should I pay off debt before applying?

It depends entirely on which ratio is binding you, which is why the calculator shows both. If the back-end ratio is the lower one, clearing a small debt with a high monthly payment can buy you more house than months of additional saving - and a credit card minimum or the tail end of a car loan is often exactly that shape. If the front-end ratio is binding, clearing the same debt buys you nothing at all in borrowing power. Look at which number is smaller before you decide where to put your money.

What does the monthly figure actually include?

PITI - principal, interest, taxes and insurance - plus any HOA or service charge. This trips people up when comparing against rent, because the mortgage quote they have been shown is usually just principal and interest. Taxes and insurance are a substantial slice of the monthly cost, and they are the part that keeps rising after your interest rate is fixed. A fixed-rate mortgage does not give you a fixed housing payment.

Why does the calculation need algebra rather than division?

Because property tax and insurance scale with the house PRICE, but the loan is the price minus your deposit - so the price you are solving for appears on both sides of the equation. Rearranging gives price = (payment - HOA + deposit x k) divided by (k + (tax rate + insurance rate)/12), where k is the monthly payment per dollar borrowed. Calculators that ignore this and just divide the payment by a payment factor overstate what you can afford, because they quietly leave the taxes out.

What is not included here?

Quite a lot, deliberately. There is no PMI, which you will pay on a deposit under 20% and which comes straight out of the same monthly budget. No closing costs. No maintenance, which is real and relentless. And no acknowledgement that a lender also weighs your credit score, employment history and cash reserves - the ratios are necessary conditions, not sufficient ones. Treat the output as the shape of the constraint rather than an offer.

So what should I actually spend?

Less than this, and the calculator cannot tell you how much less because that is a question about your life rather than your income. The useful exercise is to take the monthly figure it produces, subtract what you currently save each month and want to keep saving, and see whether the remainder still works. A lender is underwriting the risk that you stop paying it; nobody in the transaction is asking whether you will be able to replace the car, take a holiday, or absorb a broken boiler in year one.

Take it further with AI

Copy this into ChatGPT or Claude with your own numbers filled in. It hands over the figures this calculator worked out, so the answer is built on real arithmetic instead of a guess.

I used the Mortgage Affordability Calculator at https://www.bfcbrilliance.com/tools/mortgage-affordability-calculator.

What I entered:
- Gross household income ($/yr): ___
- Other monthly debt payments ($/mo): ___
- Deposit ($): ___
- Interest rate (%): ___
- Term (yr): ___
- Property tax (%/yr): ___
- Home insurance (%/yr): ___
- HOA or service charge ($/mo): ___
- Front-end ratio (%): ___
- Back-end ratio (%): ___

What it calculated:
- Most a lender is likely to approve: ___
- Loan amount: ___
- Monthly housing budget (PITI): ___
- Front-end limit: ___
- Back-end limit, after your debts: ___

Use those figures as given — they are already worked out, so please don't recalculate or estimate your own. Help me turn them into a plan: what to buy or do, in what order, roughly what it should cost, and the mistakes people most often make with this job.

Keep this general and do not give financial advice — flag where I should talk to a qualified adviser.

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