Estimate an affordable home price from income, debts, down payment and housing costs.
UNDERSTAND THE ANSWER
How is this calculated?
The estimate limits housing cost using both a front-end housing ratio and a back-end total-debt ratio. Taxes, insurance and HOA are removed before converting the available principal-and-interest payment into a loan amount.
Income and debt ratio methodMax housing = min(Income × front ratio, Income × back ratio − debts)
A practical example
A household earning $120,000 with $500 monthly debt, $60,000 down and typical housing costs may support a home in the mid-$400,000 range, depending on rate and ratios.
Calculation assumptions
Gross income and recurring monthly debts are entered accurately.
The interest rate and loan term remain fixed.
Tax, insurance and HOA are represented by one constant monthly estimate.