Mr Calcu | Know exactly what you can afford—use our smart mortgage calculator to buy with confidence.
Discover how much home you can afford with our expert-designed mortgage affordability calculator. Unlock clarity and make smarter buying decisions today.
Mortgage Affordability Calculator Description
Understanding Mortgage Affordability
Mortgage affordability helps you determine the maximum loan amount you can reasonably borrow while maintaining financial stability.
The 28/36 Rule
- Front-End Ratio: Monthly housing costs / Gross Monthly Income ≤ 28%
- Back-End Ratio: Total monthly debt payments / Gross Monthly Income ≤ 36%
Monthly housing costs typically include principal, interest, property taxes, and insurance (PITI).
Core Affordability Formula
Max Housing Cost = Gross Income × 0.28
Max Total Debt = Gross Income × 0.36
Max Mortgage Payment = min(Max Housing Cost, Max Total Debt - Other Monthly Debts)
Mortgage Principal Derivation
P = PMT × [(1 - (1 + r)^-n) / r]
Where:
- P: Loan principal
- PMT: Monthly mortgage payment
- r: Monthly interest rate
- n: Total number of payments (months)
Pro Tip: Always include property taxes and homeowner’s insurance when estimating housing costs—they can significantly affect affordability.
Real-World Case Studies
Case Study 1: High-Income, High-Debt Professional
- Monthly Income: $15,000
- Debt Payments: $4,000
- Back-End Ratio: 26.7%
- Impact: Despite high income, large debts reduce the affordable mortgage limit.
Case Study 2: Modest Income, No Debt Buyer
- Monthly Income: $4,500
- Debt: $0
- Front-End Capacity: $1,260 (28%)
- Impact: Strong affordability due to zero non-housing debt.
Important Edge Cases
- Variable income: Income averaged over 1–2 years for freelancers and gig workers.
- High property taxes/insurance: Decrease maximum affordable loan.
- Non-occupant co-borrowers: May increase affordability if allowed by lender.
- Retirees with assets: Asset-depletion methods used instead of income.
- Student loan deferment: Typically included in debt calculations at 0.5–1% of balance.
Start calculating now and move one step closer to owning your dream home!