How it works
What this estimate calculates
The estimate applies the selected debt-to-income limit to gross monthly income, then subtracts recurring monthly debt payments to find room for housing costs. After taxes, insurance, HOA dues, and mortgage insurance are considered, the remaining budget is converted to a loan amount with the fixed-rate amortization formula and combined with the down payment.
Assumptions to keep in mind
- Income is entered before taxes, and debts are entered as required monthly payments.
- The loan uses a fixed interest rate and equal monthly payments for the selected term.
- The result is a planning estimate; lenders may use different income, debt, credit, reserve, and property-cost rules.
Reviewed references
Sources behind this calculator
Last reviewed: . These references support the concepts and context; their publishers do not review or endorse TrueCost.
- What is a debt-to-income ratio? (opens in a new tab)Consumer Financial Protection Bureau
DTI as monthly debt obligations divided by gross monthly income and the fact that limits vary.
- Debt-to-Income Ratios (opens in a new tab)Fannie Mae
Context for the editable 36% starting assumption and why it is not a universal approval limit.
- Figure out how much you want to spend (opens in a new tab)Consumer Financial Protection Bureau
Considering payment capacity, cash, taxes, insurance, maintenance, utilities, and HOA dues together.
Questions people ask
What is debt-to-income ratio?
Debt-to-income ratio compares required monthly debt payments with gross monthly income. Lenders calculate it in different ways, so the selected limit is a planning input rather than an approval standard.
Is the highest estimated price my ideal budget?
Not necessarily. A comfortable budget should also leave room for savings, repairs, utilities, childcare, travel, and other priorities that a lending ratio may not capture.
Does a bigger down payment always mean I can afford more?
It can reduce the loan and monthly payment, but using more cash also leaves less available for closing costs, emergencies, and repairs. Consider both the payment and the cash left afterward.
Use the result as a starting point
Try a conservative scenario and an optimistic one. If the decision only works under one narrow set of assumptions, that is useful information. For a purchase, loan, tax, or investment decision, confirm the final figures with current documents and an appropriately qualified professional.
Read the full financial disclaimer