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Mortgage Pre-Qualifier

Find out how much house you can afford based on your income, debts, down payment, and current interest rates.

Find out how much house you can afford

Based on the standard 28/36 debt-to-income rule, your down payment, and current rates.

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Auto, student, credit card minimums, etc.

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Maximum housing % / maximum total debt % of gross income.

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  1. Enter your gross monthly income—the pre-tax amount on your paystub, including regular bonuses or commissions if consistent.
  2. Add up your monthly debt payments—auto loans, student loans, credit card minimums, child support, and any other recurring debt.
  3. Input your available down payment—the cash you'll actually bring to closing (excluding reserves).
  4. Enter today's interest rate from a lender quote or current market average for your loan type.
  5. Add property tax and insurance estimates—use local averages if unsure (often 0.8%–2% of value for tax, $1,200–$2,500 for insurance).
  6. Pick a DTI rule—Conservative (28/36) matches Fannie Mae's standard; Standard allows FHA-style limits; Aggressive pushes the upper bound.
  7. Click Calculate to see your max home price across three qualification scenarios.
HOW IT WORKS

How mortgage pre-qualification works

Mortgage pre-qualification estimates how much home you can afford by applying debt-to-income (DTI) ratios to your monthly income and debts. Lenders use two ratios: the front-end ratio (housing payment ÷ gross income) and the back-end ratio (all debt payments ÷ gross income). The 28/36 rule—28% front-end, 36% back-end—is the long-standing benchmark for conventional loans, though Fannie Mae now allows back-end ratios up to 50% for strong borrowers.

Step 1: Find your maximum housing payment

Lenders apply two ceilings and use the lower result:

  • Front-end limit: Gross monthly income × front-end % (e.g., 28%)
  • Back-end limit: (Gross monthly income × back-end %) − existing monthly debts

For an $8,000 monthly income with $600 in debts under the 28/36 rule: front-end allows $2,240; back-end allows $2,880 − $600 = $2,280. The lower figure ($2,240) is your maximum housing payment including principal, interest, taxes, insurance, HOA, and PMI.

Step 2: Strip out taxes, insurance, and PMI

Because the housing payment limit covers PITI (and PMI/HOA), we subtract monthly property tax, homeowners insurance, HOA dues, and estimated PMI to isolate the portion available for principal and interest (P&I). PMI is auto-estimated when your down payment is below 20% of the home price—an iterative calculation since PMI itself depends on the loan-to-value ratio.

Step 3: Reverse the amortization formula

Once we know the maximum P&I payment, we solve for the loan principal using the inverse amortization formula:

P = M × [(1+r)^n − 1] / [r × (1+r)^n]

Where M is the max P&I payment, r is the monthly interest rate, and n is the number of payments. Adding your down payment to this max loan amount yields the maximum home price you can qualify for.

Why DTI matters more than income alone

Two borrowers earning the same income can qualify for vastly different loan amounts depending on existing debt. A borrower with $1,500 in monthly debts may qualify for $120,000 less home than a debt-free borrower at the same income. This is why paying down auto loans and credit cards before applying—sometimes called "credit reshaping"—can materially increase your purchasing power.

What this calculator doesn't include

Pre-qualification is an estimate based on self-reported figures. It doesn't verify your credit score (which sets your rate), employment history (2 years typically required), asset reserves (2–6 months of PITI often needed), or property-specific factors like condo warrantability and appraisal gaps. For a binding number, pursue a pre-approval with a lender who pulls your credit and verifies documentation.

"/> Worked example

Scenario: A buyer earning $8,000/month gross with $600 in existing debts, $80,000 down, 30-year fixed at 6.75%, $6,000/year property tax, $1,800/year insurance, using the standard 28/36 rule.

  • Front-end limit: $8,000 × 28% = $2,240
  • Back-end limit: $8,000 × 36% − $600 = $2,280
  • Max housing payment: $2,240 (lower of the two)
  • Less monthly tax & insurance: $2,240 − $500 (tax) − $150 (insurance) = $1,590 for P&I
  • Reverse amortization at 6.75%, 30yr: max loan ≈ $244,800
  • Add down payment: $244,800 + $80,000 = $324,800 max home price

Under the more aggressive 35/50 rule, the same buyer could qualify for roughly $420,000—about $95,000 more. But stretching the DTI leaves no cushion for property tax hikes, job changes, or unexpected repairs.

"/> Glossary

Front-End Ratio
Housing payment (PITI + HOA) divided by gross monthly income. Conventional lenders cap this at 28%.
Back-End Ratio
Total monthly debt (housing + all other debts) divided by gross monthly income. Conventional cap is 36%; FHA allows up to 43%.
Pre-Qualification
An informal estimate of borrowing power based on self-reported data. Not a loan commitment.
Pre-Approval
A lender's conditional commitment after verifying income, assets, and credit. Carries far more weight with sellers.
PITI
Principal, Interest, Taxes, and Insurance—the four core components of a monthly housing payment.
Reserves
Liquid assets remaining after closing, typically expressed as months of PITI. Lenders often require 2–6 months.
FAQ

Frequently asked questions

Quick answers to the most common questions about mortgage pre-qualifier.

What is the difference between pre-qualification and pre-approval?
Pre-qualification is an informal estimate of how much you might borrow based on self-reported financial information. Pre-approval is a formal commitment from a lender after they verify your income, assets, and credit. Sellers take pre-approval far more seriously in competitive markets.
What debt-to-income ratio do lenders look for?
Most conventional lenders prefer a front-end ratio (housing costs to income) below 28% and a back-end ratio (all debts to income) below 36%. FHA loans allow back-end ratios up to 43%, and some conventional loans with compensating factors go up to 45–50%.
How does my credit score affect how much I can borrow?
Your credit score directly impacts the interest rate you qualify for. A higher score (740+) unlocks the lowest rates, lowering your monthly payment and increasing your purchasing power. Scores below 620 may limit you to FHA or subprime options.
Should I include bonuses or side income in my qualification?
Lenders typically require a two-year history of consistent bonus, commission, or self-employment income before counting it. W-2 base income is the easiest to qualify with. Document everything with tax returns and pay stubs.
How much down payment do I really need?
Conventional loans require as little as 3% down, FHA loans 3.5%, and VA and USDA loans offer 0% down for eligible borrowers. Putting 20% down eliminates private mortgage insurance (PMI) but is not required to buy a home.

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This calculator is provided for informational and educational purposes only and does not constitute financial, legal, tax, or professional advice. Results are estimates based on the inputs you provide and standard assumptions. Actual figures may vary. Please consult a qualified professional before making financial decisions. Read our full disclaimer.