Methodology

The 28/36 DTI rule

This calculator uses the 28/36 debt-to-income (DTI) rule, which is the standard guideline most conventional lenders apply when evaluating mortgage applications.

The front-end ratio (28%) limits total monthly housing costs — principal, interest, property taxes, and insurance (PITI) — to no more than 28% of gross monthly income.

The back-end ratio (36%) limits all monthly debt obligations — housing costs plus existing debts like car loans, student loans, and minimum credit card payments — to no more than 36% of gross monthly income.

We apply both limits and use the more conservative result. If your existing debts are high, the back-end ratio will be the binding constraint. If your existing debts are low, the front-end ratio sets the ceiling.

Monthly payment formula

Monthly principal and interest is calculated using the standard amortization formula:

Where P = loan principal, r = monthly interest rate (annual rate / 12), and n = total number of payments (loan term in years × 12).

Property tax estimate

Property taxes are estimated at 1.1% of the home value annually, which is the national average effective property tax rate across all US states (per ATTOM Data Solutions and Tax Foundation data). This is divided by 12 to get the monthly estimate included in PITI.

Actual rates vary significantly by state and county. Texas, Illinois, and New Jersey have effective rates above 2%. Hawaii, Alabama, and Colorado are below 0.5%. The state dropdown is provided for context — this version does not apply state-specific tax rates. For state-level accuracy, verify the effective rate for your target county.

PMI calculation

Private mortgage insurance (PMI) is added when the down payment is less than 20% of the home price. PMI is estimated at 0.5% of the loan amount annually, divided by 12 for the monthly cost. Actual PMI rates depend on your credit score, loan type, and lender — typical range is 0.5% to 1.5% annually.

PMI can be removed once your loan-to-value ratio reaches 80% (20% equity). You can request cancellation at that point, or it automatically terminates at 78% LTV under the Homeowners Protection Act.

Homeowner's insurance

Homeowner's insurance is estimated at 0.5% of the home value annually. Actual premiums vary by location, coverage level, home age, and claims history. Flood and earthquake insurance are separate policies not included in this estimate.

Limitations

• HOA fees are not included. These can range from $100 to $1,000+ per month and directly reduce affordability by increasing total monthly housing costs.
• Property tax rates are estimated at the national average. Actual rates vary substantially by state and county.
• This calculator assumes a fixed-rate conventional mortgage. Adjustable-rate mortgages, FHA, VA, and USDA loans have different requirements and costs.
• Credit score is not factored in. Your actual interest rate depends heavily on your credit score — rates for excellent credit may be 1-2% lower than the default input.
• Closing costs (typically 2-5% of the loan amount) are not included.
• All calculations happen entirely in your browser. No data you enter is stored or transmitted.

Not financial advice

This calculator provides estimates based on widely-used underwriting guidelines. It does not constitute financial advice, mortgage advice, or any recommendation to buy or not buy a home. Lenders may apply different standards. The only definitive affordability number comes from a formal mortgage pre-approval. Consult a licensed mortgage professional for personalized guidance.