Before you tour a single open house, the number that actually decides what you can buy is the maximum mortgage a lender will approve. Lenders do not look at your dream home first; they look at your income, your existing debts, and the interest rate, and they back-solve the largest loan the math says you can repay. This calculator does that same back-solve for you in seconds, so you shop from a position of numbers rather than hope.
Enter your annual gross income, your monthly non-mortgage debts, the DTI cap you want to test (the industry default is 36%, and the FHA ceiling is 43%), your expected interest rate, your loan term, and your planned down payment percentage. The result card shows the maximum monthly P&I your budget allows, the maximum mortgage loan you qualify for, and the maximum home price that loan supports at your chosen down payment.
How to Use
- Enter your Annual Gross Income — household pre-tax pay, including salary, wages, alimony, and any steady side income a lender will count. Bonuses usually count at 70–80% of their trailing-two-year average.
- List your Existing Monthly Debts — car loans, student loans, credit-card minimums, and any child support you pay. Leave this at zero if your only recurring debt is rent (rent is not counted in back-end DTI).
- Set your Max Debt-to-Income Ratio (DTI). Stick with 36% for a safe conventional approval, or push to 43% if you are aiming for an FHA-style max qualification and have strong credit.
- Type your Interest Rate (APR). If you have not locked a rate yet, plug in the current national average and test ±0.5% to stress-test your capacity.
- Choose your Loan Term — 30 years is the default; 15 years usually carries a lower rate but shrinks the maximum loan because each payment is much larger.
- Set your Down Payment percentage. This does not change the maximum loan itself, but it converts that loan into the maximum home price you can offer.
- Read the two highlighted numbers: Maximum Mortgage Loan (the principal the lender will fund) and Maximum Home Price (that loan divided by your down-payment share).
The math behind the result is the standard amortization formula inverted. Lenders compute your allowable monthly payment as income ÷ 12 × DTI% − existing debts, then divide that payment by the loan's monthly payment factor r(1+r)ⁿ / ((1+r)ⁿ − 1) to recover the largest loan principal P that the payment can carry.
How Lenders Size Your Maximum Mortgage
Mortgage approval is a ratio game. Two ratios matter:
- Front-end (housing) ratio — your future PITI payment as a share of gross monthly income. The traditional ceiling is 28%.
- Back-end (total) ratio — PITI plus all other recurring debts as a share of gross monthly income. The traditional ceiling is 36%, and FHA-approved lenders can go up to 43% (and in some automated-underwriting cases, higher with compensating factors).
This calculator uses the back-end ratio because it is the binding constraint for most buyers. Start with your monthly gross income, multiply by your chosen DTI cap, subtract your existing debts, and the remainder is the largest monthly principal-and-interest payment the lender will underwrite. The maximum loan is that payment divided by the mortgage payment factor for your rate and term.
Notice what this tool does not subtract: property tax, home insurance, and PMI. In a real approval, those escrow costs are piled on top of P&I and further compress the loan you can hold. Treat the result here as the maximum loan on a P&I-only basis — then plan to spend roughly another 15–25% of P&I on tax and insurance in a normal market.
Examples
Example 1 — The headline case. A household earns $150,000 per year, has no car or student-loan payments, qualifies at the 43% back-end DTI cap, expects a 7.0% rate on a 30-year fixed, and plans 20% down. Monthly gross income is $12,500; the DTI cap allows $5,375 per month in total debt; with no other debts that entire $5,375 is available for principal and interest. Divided by the 30-year payment factor at 7%, that supports a maximum mortgage loan of about $807,900, which at 20% down buys a home priced near $1,009,900.
Example 2 — The debt drag. The same $150,000 household, but now they carry a $1,000 monthly car and student-loan payment. That debt consumes part of the DTI budget, leaving only $4,375 for P&I. The maximum loan shrinks to roughly $657,600, and the maximum home price drops to about $822,000. Paying off a $1,000 car loan before applying for a mortgage can unlock a $150,000 jump in buying power.
Example 3 — The 15-year penalty. At 7.0% on a 15-year term, the same $5,375 monthly P&I only supports a loan of about $598,000, because each payment has to amortize twice as fast. The 15-year loan saves interest over its life, but it costs you roughly 26% of your buying power on day one. Most buyers take the 30-year and prepay voluntarily.
Example 4 — The zero-income floor. If annual income is entered as $0, the DTI math returns a zero payment, which means a zero maximum loan. A mortgage pre-approval cannot be issued without documented income; lenders require two years of W-2s or tax returns, and gig workers need two years of 1099s averaged.
FAQ
What is the maximum mortgage I can get based on my income?
Multiply your annual gross income by your DTI percentage (typically 36%–43%), divide by 12 to get your monthly debt budget, subtract your existing monthly debts, and divide the remainder by the mortgage payment factor for your rate and term. On $150,000 of income at 43% DTI, 7.0% and 30 years, that works out to roughly an $808,000 maximum loan.
What DTI do mortgage lenders actually use?
Conventional Fannie Mae and Freddie Mac guidelines prefer a back-end DTI at or below 36%, with the front-end housing ratio under 28%. FHA loans permit up to 43% back-end, and automated underwriting systems can stretch to 45–50% when the borrower has strong credit, large reserves, or a substantial down payment. The 43% figure is the most useful planning ceiling.
How much mortgage can I get with no other debts?
If your only recurring monthly obligation is rent (which lenders do not count in back-end DTI), your entire DTI budget is available for P&I. On $150,000 of income at 43% DTI, that is $5,375 per month, which supports a loan near $808,000 at 7.0% over 30 years.
Does a larger down payment increase my maximum loan?
No. The maximum loan principal is fixed by your income, DTI, rate, and term — the down payment does not change it. What the down payment changes is the maximum home price you can offer: a larger down payment pushes the affordable home price higher for the same loan. At 20% down, max home price equals max loan divided by 0.80.
Why is this number lower than what a lender quoted me?
Because this calculator sizes the loan on principal-and-interest only. Real approvals also add estimated property tax (usually 0.5%–2.5% of the home value per year), home insurance ($1,000–$3,000 per year), and PMI if you put less than 20% down. Those escrow costs typically consume 15–25% of your P&I budget and pull the approved loan down by a similar margin.
Will paying off my credit cards raise my maximum mortgage?
Yes. Every $100 of eliminated monthly debt frees up roughly $15,000–$18,000 of loan capacity at today's rates on a 30-year term. Paying down a $1,000 car loan before applying can raise your maximum loan by $150,000 or more, which is why mortgage brokers often tell buyers to defer large purchases and consolidate debt 3–6 months before pre-approval.
Disclaimer
This maximum mortgage calculator is provided for informational purposes only and does not constitute financial, lending, or tax advice. Estimates assume a standard amortizing fixed-rate loan and do not include property tax, home insurance, PMI, HOA dues, closing costs, or reserve requirements. Actual approvals vary by lender, credit score, credit history, location, loan program, and automated-underwriting result. Always confirm your maximum loan and final terms directly with a licensed mortgage professional before making an offer on a home.