Method
Max monthly housing payment = monthly income x debt-to-income limit / 100 - monthly debt (never below zero). Estimated loan amount = that payment divided by the payment per dollar borrowed at the entered rate and term. Estimated home price = loan amount + down payment.
The debt-to-income limit is the share of gross monthly income you allow all debt payments, including housing, to take; lenders commonly look at figures in the mid-30s to low-40s percent.
Worked example
| Monthly income | $7,000 |
|---|---|
| Monthly debt | $450 |
| Down payment | $60,000 |
| Annual rate | 6.7% |
| Years | 30 |
| Debt-to-income limit | 36% |
| Max monthly housing payment | $2,070 |
| Estimated loan amount | $320,792 |
| Estimated home price | $380,792 |
Assumptions and limits
- Property tax, homeowners insurance, mortgage insurance and HOA dues are not included in the payment, so a real budget will be tighter.
- Lender approval depends on credit, reserves and other factors this estimate does not model.
Educational estimate only. It is not financial, tax, legal, or investment advice.