Income, debts, and DTI limits
A common planning example limits housing costs to 28% of gross monthly income and all debt payments to 36%. The tighter of the two editable caps becomes the maximum monthly housing payment. This page uses the same principal-and-interest formula as the mortgage calculator, inverted from that payment cap.
Housing cap = monthly income × housing DTI
Back-end leftover = monthly income × total DTI − other monthly debts
Maximum housing payment = the smaller of those two amounts
Maximum principal and interest = maximum housing payment − annual tax ÷ 12 − annual insurance ÷ 12 − monthly HOA
Loan amount = the present value of that principal-and-interest payment
Estimated home price = loan amount + down payment amount
Example
$90,000 of gross income is $7,500 a month. A 28% housing cap is $2,100; a 36% total cap minus $500 of other debts is $2,200, so the housing cap binds. After $300 of monthly property tax and $100 of insurance, $1,700 remains for principal and interest. At 6.5% for 30 years, that payment supports a $268,958.39 loan. Adding a $60,000 down payment gives an estimated $328,958.39 home price.
What this estimate leaves to the lender
Credit score, reserves, occupancy, property type, mortgage insurance, closing costs, and program rules sit outside this DTI model. Set the down payment to cash you can use after reserving money for closing costs and emergencies. Property tax and insurance are the annual dollar amounts you enter.