🏡 Home Affordability Calculator

The most widely used lender guideline: 28% Rule (Front-End DTI): Monthly housing costs ≤ 28% of gross monthly income Housing costs = Principal + Interest + Tax + Insurance (PITI) 36% Rule (Back-End DTI): All monthly debts ≤ 36% of gross monthly income All debts = PITI + car loan + student loan + credit cards + etc. Conservative example: $10,000/month gross income Max housing (28%) = $2,800/month Max all debts (36%) = $3,600/month If existing debts = $900/month → housing budget = $2,700/month

Monthly Gross Income = Annual Income ÷ 12 Front-End Max = Monthly Income × 28% Back-End Max = Monthly Income × 36% − Existing Debts Max Housing Payment = min(Front-End Max, Back-End Max) PITI = Principal + Interest + Property Tax + Insurance + HOA ≤ Max Housing Payment

Available for P&I = PITI Max − Tax/mo − Insurance/mo − HOA/mo Max Loan = Available P&I × [(1+r)ⁿ − 1] / [r × (1+r)ⁿ] Where r = monthly rate, n = term in months (This is the inverse of the payment formula) Max Home Price = Max Loan + Down Payment

P — Principal: Portion of payment reducing loan balance I — Interest: Portion going to lender as interest T — Taxes: Monthly escrow for property taxes I — Insurance: Monthly escrow for homeowner's insurance + PMI: Private Mortgage Insurance if down < 20% + HOA: Homeowners Association fees (if applicable) Lenders use total PITI (not just P&I) for DTI calculation.

Required when down payment < 20% of home price. Typical cost: 0.5% – 1.5% of loan amount per year. Example: $350,000 loan → ~$146–$438/month PMI PMI is cancelled automatically when LTV reaches 78% (or you can request removal at 80% LTV). Putting 20% down avoids PMI entirely — saving hundreds per month.