In the U.S., lenders use two important ratios, called the front-end and back-end debt-to-income (DTI) ratios, to determine how much they are willing to lend to a homebuyer. These ratios help assess risk, and keeping them lower improves chances of qualifying for favorable mortgage terms.
Also known as the mortgage-to-income ratio, this is calculated by dividing total monthly housing costs (mortgage, insurance, property taxes, HOA) by gross monthly income.
Front-end DTI = (Monthly Housing Costs ÷ Gross Monthly Income) × 100%
This includes housing costs plus all other recurring monthly debts such as car loans, student loans, and credit card payments.
Back-end DTI = (Housing Costs + Other Debts ÷ Gross Monthly Income) × 100%
Conventional loans are not insured by the federal government and often follow guidelines from agencies like Fannie Mae or Freddie Mac. The 28/36 Rule states that no more than 28% of gross monthly income should go to housing costs, and no more than 36% should go to total debt obligations.
FHA loans are government-insured and allow for more flexible qualifications. Applicants should keep housing costs under 31% of gross income and total debts under 43%. FHA loans also require a 1.75% upfront mortgage insurance premium.
VA loans are available to veterans, active service members, and some spouses. Approval generally requires that total debt obligations (back-end DTI) do not exceed 41% of gross monthly income. VA loans usually do not use the front-end ratio but may include funding fees.
Some lenders allow custom ratios between 10% and 50%. Lower percentages are safer and easier to maintain, while higher ratios increase borrowing risk. For conservative planning, the 28/36 Rule is often a good benchmark.
Our house affordability calculator includes clear documentation and step-by-step guides to help you understand and use it effectively. We also provide a FAQ section to address common questions about determining how much house you can afford.
Yes, our house affordability calculator is completely free to use, with no account or sign-up required.
The calculator uses verified financial formulas and the 28/36 DTI rule to estimate affordability. Accuracy depends on the data you input, such as income, debts, and interest rates.
Yes, the house affordability calculator is designed for U.S. residents and can be customized with local data, such as property taxes and insurance rates, for any city.
The calculator uses current data and assumptions about interest rates and costs. It cannot predict future market changes, so we recommend updating inputs periodically.
The 28/36 DTI rule means housing costs should not exceed 28% of your gross monthly income (front-end DTI), and total debts (housing + other) should not exceed 36% (back-end DTI). Our calculator uses this to estimate affordability.