Mortgage Affordability Worksheet

The numbers

Date

Gross household income

Monthly debts

Deposit

Rate

Term

Property tax %

Insurance %

HOA

Front-end %

Back-end %

FRONT LIMIT

BACK LIMIT

BINDING LIMIT

MAX PRICE

Max loan

The rules and what they mean

Front-end ratio (conventional)

28% of gross — housing only

Back-end ratio (conventional)

36% of gross — ALL debt

FHA, commonly

nearer 31 / 43

⚠ These are

CONVENTIONS, not laws

Housing costs mean

PITI + HOA, not just the mortgage

Binding limit

whichever of the two is LOWER

⚠ Debt below the threshold

costs nothing

⚠ Debt above it

~130x its monthly value in price

Per $100/mo of capacity

about $13,065 of house (at these rates)

Not included

PMI, closing costs, maintenance

Also assessed

credit score, employment, reserves

⚠ Approval is

a CEILING, not a target

Before you take the number seriously

• Property tax rate looked up for the actual area
• Insurance quoted, not guessed — it has risen sharply in many places
• HOA or service charge included
• PMI budgeted if the deposit is under 20%
• Closing costs held back IN ADDITION to the deposit
• Maintenance budgeted as an ongoing cost
• Current monthly saving subtracted to see what is left
• Both ratios checked to see which one binds
• Small high-payment debts identified as pay-off candidates
• A rate quote from an actual lender, not an average
• The figure sanity-checked against a month of real spending

Approval is a ceiling

A lender is underwriting the risk that you stop paying IT. Nobody in the transaction is asking whether you can still save, replace the car or absorb a broken boiler. Take the monthly figure, subtract what you want to keep saving, and see if it still works.

The debt cliff

Only one ratio binds at a time. While the front-end binds, extra monthly debt costs nothing. The moment the back-end drops below it, every $100/month costs about $13,065 of house. People walk off this cliff because the first few debts genuinely were free.

A fixed rate is not a fixed payment

Taxes and insurance are a real slice of PITI and they keep rising after your rate is locked. Comparing a rent figure against a principal-and-interest quote is comparing two different things.