Home Loan Predictor

Most homebuyers focus on the purchase price, but lenders care about monthly cash flow. Your mortgage approval depends on two ratios: front-end (housing payment only) and back-end (all monthly debt). The stricter of these two determines your maximum payment.

The 28/36 rule dominates conventional lending: housing costs cannot exceed 28% of gross monthly income, and total monthly debt cannot exceed 36%. If you earn $6,000 monthly, housing maxes out at $1,680, but if you already pay $800 in other debt, your housing budget drops to $1,360 to stay under the 36% total.

Lenders assume your housing payment includes principal, interest, property taxes, insurance, and HOA fees. About 20-25% of your payment typically goes to taxes and insurance, so the actual loan payment is smaller than your maximum housing budget. This calculator estimates based on typical ratios, but actual costs vary by location and property type.

Use this calculator when shopping for homes or getting pre-qualified for a mortgage. It shows your realistic budget before you fall in love with an unaffordable house. Real estate agents and mortgage brokers use similar calculations to set your search parameters.

This tool assumes conventional loan standards and typical property costs. It does not apply to government loans (FHA, VA, USDA) which have different debt ratio limits, or investment properties which require higher down payments and different qualification standards. Jumbo loans above $766,550 often have stricter requirements than this calculator assumes.

Borrowers often use net income instead of gross income when calculating affordability. Lenders always use gross income — the amount before taxes and deductions. Using net income understates your qualifying power by 20-30%, making you think you cannot afford homes actually within reach.

Another common error is forgetting about property taxes and insurance in the monthly payment. Many buyers calculate based on principal and interest only, then discover their actual payment is 20-25% higher. This calculator reserves 20% for taxes and insurance, but actual costs vary significantly by location and home value.

People also underestimate their monthly debt by forgetting about automatic payments or minimum credit card payments. Lenders count every recurring payment on your credit report, even if you pay more than the minimum. A $5,000 credit card balance with a $150 minimum payment counts as $150 monthly debt, not the $300 you might actually pay to eliminate it faster.

The debt-to-income calculation starts with gross monthly income divided by total monthly debt payments. Front-end ratio = (Principal + Interest + Taxes + Insurance) ÷ Gross Monthly Income. Back-end ratio = (Housing Payment + All Other Monthly Debt) ÷ Gross Monthly Income.

To find maximum loan amount, the calculator works backwards from affordable payment. If you qualify for a $1,500 housing payment and reserve $300 for taxes/insurance, you have $1,200 for principal and interest. Using the standard mortgage formula: Loan = Payment × [1 - (1 + r)^(-n)] ÷ r, where r is monthly interest rate and n is number of payments.

For example, at 6.5% for 30 years: r = 0.065 ÷ 12 = 0.0054, n = 360 payments. A $1,200 payment supports approximately $194,000 in loan principal. Add your down payment to find maximum purchase price. The calculation assumes fixed-rate amortization and standard property costs.

The 28/36 rule dates to 1980s underwriting standards but many lenders now approve back-end ratios up to 43% for borrowers with strong credit and reserves. Some portfolio lenders go higher for high-income professionals. Conversely, lenders tighten ratios for borrowers with low credit scores or minimal cash reserves, sometimes requiring 25/33 instead of 28/36.