What this calculator does
It works backward from your income to a home price, rather than forward from a home price to a payment. Starting from your gross monthly income, it applies a debt-to-income limit to find the most you could pay every month across all debts, subtracts what you already owe and the estimated property tax, insurance and HOA costs, and turns what is left into a loan amount using a standard mortgage amortisation formula. Your down payment is added on top, since it does not change what the loan can be but does raise the price you can reach.
What each input means
- Annual gross income. Income before tax, from all borrowers going on the loan.
- Existing monthly debt. Recurring payments on cards, auto loans, student loans and similar, not everyday spending.
- Down payment. Cash put toward the purchase upfront. It raises the purchase price you can reach; it does not change the loan amount, since that is set by what your income can service monthly.
- Interest rate and loan term. The rate and repayment period used to convert a monthly payment into a loan amount.
- Max debt-to-income ratio. The share of gross monthly income a lender allows for housing plus existing debt combined. 36% is common for a conventional loan; change it to match a specific lender or program.
- Property taxes, home insurance, mortgage insurance, HOA fees. These are the escrow items collected monthly alongside principal and interest. Property taxes, insurance and mortgage insurance are entered as yearly amounts and converted to monthly here; HOA fees are entered monthly, since that is how they are normally billed.
Worked example
$95,000 annual income, $400 in existing monthly debt, a $30,000 down payment, a 6.5% rate over 30 years, a 36% DTI limit, $3,600 a year in property taxes and $1,200 a year in home insurance:
- Max monthly payment under the DTI limit: $2,450.
- Monthly escrow (taxes plus insurance): $400.
- That leaves $2,050 a month for principal and interest.
- Max loan amount: roughly $324,332.
- Max purchase price, loan plus down payment: roughly $354,332.
Raising the down payment to $60,000 with everything else unchanged does not move the loan amount at all. It moves the max purchase price up by exactly $30,000, to roughly $384,332, because a larger deposit means less needs to be borrowed for the same price.
When the result is "not enough room in your budget"
If existing debt and estimated escrow already consume the full debt-to-income allowance, there is nothing left over for a loan payment. Rather than showing a negative or zero loan amount as if it were a real figure, the calculator states this directly. It is a real, useful answer: it tells you that some combination of paying down debt, finding a lower-cost home's tax and insurance profile, or qualifying with a lender that allows a higher DTI ratio would be needed before a loan amount applies.
Frequently asked questions
What is a debt-to-income (DTI) ratio, and why 36%?
DTI is the share of your gross monthly income that goes toward debt payments, including the mortgage being calculated. 36% is a common limit for a conventional loan, but lenders vary: some allow more, especially with a strong credit profile, and government-backed loan programs sometimes allow more too. That is why this calculator lets you change it rather than hardcoding 36%.
Why does raising my down payment not change the loan amount?
Because the loan amount is set by what your income can service every month, not by how much cash you put down. What the down payment does change is the purchase price you can reach: it stacks on top of the loan amount dollar for dollar, since a bigger deposit means you need to borrow the same amount to buy a more expensive home.
What counts as "existing monthly debt"?
Recurring debt payments: credit cards, auto loans, student loans, personal loans and similar. It should not include everyday living costs like groceries or utilities, which the DTI ratio is not designed to capture.
What is escrow, and why does it reduce my loan amount?
Escrow is the property taxes, homeowners insurance, mortgage insurance and HOA fees a lender typically collects monthly alongside principal and interest. Because your total monthly payment, escrow included, is capped by your debt-to-income allowance, a higher escrow estimate leaves less room for principal and interest, which lowers the loan the same income can support.
What does "not enough room in your budget" mean?
It means your existing debt and estimated monthly costs already use up the entire debt-to-income allowance before a mortgage payment is even considered, so there is no loan amount to show. It is a real result, not an error: some combination of lower debt, a smaller escrow estimate, or a higher DTI limit from a different lender would be needed to reach an affordable loan.
Is this a mortgage pre-approval?
No. This is a planning estimate based on the numbers you enter and a standard debt-to-income calculation. An actual lender will also look at credit history, employment, assets and its own underwriting rules, any of which can move the number up or down.
This is a planning estimate, not a mortgage pre-approval or an offer of credit. Actual lending decisions also depend on credit history, employment and a lender's own underwriting rules.