📖 Overview
Use this tool to estimate an affordability ceiling before shopping for homes.
⚙️ How It Works
This estimates maximum affordable loan size from income, debt obligations, target housing ratio, and financing assumptions.
The Formula
Max Payment = (Gross Income × Housing Ratio) − Existing Debt | Loan = Max Payment ÷ Monthly Rate Factor
| Housing Ratio | Target PITI-to-income ratio (e.g. 28%) |
| Existing Debt | Current monthly debt obligations reducing available room |
| Rate Factor | Amortization factor based on rate and term |
⚠️Maximum affordability is not the same as comfortable affordability. Borrowing at the ceiling of what lenders approve can leave no room for savings, emergencies, or lifestyle costs.
Quick Reference
| Gross Income | At 28% ratio | At 32% ratio | At 36% ratio |
|---|---|---|---|
| $5,000/mo | ~$220k loan | ~$260k loan | ~$295k loan |
| $7,500/mo | ~$335k loan | ~$390k loan | ~$445k loan |
| $10,000/mo | ~$445k loan | ~$520k loan | ~$590k loan |
| $15,000/mo | ~$670k loan | ~$780k loan | ~$890k loan |
Practical Tips
💡 Use conservative income assumptions.
💡 Run multiple rate scenarios to test rate sensitivity.
Frequently Asked Questions
❓ Does this include down payment?
No, this estimates affordable loan amount from payment capacity.
❓ Why can debt reduce affordability sharply?
Existing obligations directly reduce available housing payment room.