How much house can you actually afford?

Lenders use debt-to-income ratio, or DTI, as their primary tool for deciding how much they'll let you borrow. There are two versions: front-end DTI, which is just your proposed housing payment divided by your gross monthly income, and back-end DTI, which adds in all your other debt payments — car loans, student loans, credit card minimums — divided by the same gross income. Most conventional lenders cap back-end DTI somewhere around 43-50%, and some government-backed programs allow even higher.

Here's the part that surprises people: that 43-50% ceiling is the maximum the lender is willing to risk, not a recommendation for what you should actually spend. Lenders make money on the loan regardless of whether stretching your budget to the limit leaves you comfortable. A more conservative guideline — the 28/36 rule — suggests capping housing costs at 28% of gross income and total debt at 36%. It's one commonly cited framework among several, not a law of physics, but it leaves meaningfully more breathing room than the lender's maximum.

This calculator computes affordability at three different DTI tiers — conservative, moderate, and aggressive — specifically so you can see the gap between what a bank would approve you for and what would actually leave you with a comfortable monthly budget. The difference between those numbers is often $50,000-$100,000 of home price, which is a significant decision to be making without seeing both sides of it.

A mortgage lender's incentive is to originate a loan you can make payments on long enough that the loan doesn't default — that's a lower bar than "affordable enough that you're not financially stressed." Lenders also typically don't see your full picture: childcare costs, irregular expenses, how much you want to save, or what your actual day-to-day spending looks like. Their DTI calculation is a blunt instrument applied at the moment of underwriting, not an ongoing check-in on your financial comfort.

This is why the maximum-approved number and the actually-affordable number diverge so often. Someone with no other debt and modest day-to-day spending might genuinely be fine at a higher DTI. Someone with student loans, a car payment, and a goal of saving aggressively for retirement might find even a "moderate" DTI uncomfortably tight. The lender's number doesn't know which situation you're in — only you do.

Start with the conservative tier and see what home price it suggests. If that price feels achievable in your market, that's a strong signal you have real margin in your budget. If even the aggressive tier feels tight relative to homes you're looking at, that's worth sitting with before you go further into the home search — it's a much cheaper lesson to learn from a calculator than from a mortgage application.

Pay close attention to the true monthly cost figure, not just the price tag. Two homes at the same price can have very different true monthly costs depending on property tax rates, HOA fees, and insurance costs in that specific area — all of which this calculator factors in alongside principal and interest.