Work out the home price you can realistically afford from your income, debts and down payment.
Conventional lenders apply two tests simultaneously. The front-end (housing) ratio caps your total housing payment (principal, interest, taxes, insurance — PITI) at 28% of gross monthly income. The back-end (total DTI) ratio caps all debt payments at 36%. The binding constraint is whichever produces the lower maximum payment, and from that payment limit we back-solve for the highest home price that fits. FHA guidelines are slightly more generous (31/43) and may allow a higher purchase price.
Front-end DTI limit
Max PITI (front) = Gross Monthly Income × front-end limit %
Back-end DTI limit
Max PITI (back) = Gross Monthly Income × back-end limit % − Monthly debts
This is an estimate based on conventional DTI guidelines. Actual loan qualification depends on credit score, loan type, reserves and lender discretion. Consult a licensed mortgage professional.
Lenders apply both tests simultaneously; you must satisfy both. The tighter one determines how much house you can afford. High existing debts typically make the back-end ratio binding.
Car loans, student loans, credit card minimum payments, personal loans, alimony and child support. Do not include utility bills, groceries or the future housing payment itself — those are not counted by underwriters.
Yes, for two reasons: a larger down payment reduces the loan, which reduces the P&I component of PITI, allowing a higher total price within the DTI limits. It also lowers LTV, potentially eliminating PMI.
At 80% LTV or below, conventional lenders drop the PMI requirement. This calculator flags whether your down payment meets that threshold but does not add a PMI estimate to the payment — use the Down Payment Calculator for that detail.