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Borrowing capacity calculator

Estimate the maximum mortgage you can borrow from your monthly income, existing debts, target rate and loan term.

Result
$112,227
Borrowing capacity · Max monthly payment : $850

About this tool

Why use this tool

Your borrowing capacity — how much a lender will approve for a mortgage — is the starting point of any home search. Getting pre-approved before touring homes helps you make competitive offers, especially in tight markets, and prevents wasted visits on unaffordable properties. Most US lenders benchmark against the classic 28/36 rule — the housing payment (PITI) under about 28 % of gross income, total debt-to-income (DTI) under 36-43 %. The 43 % figure was a hard cap for Qualified Mortgages until the CFPB replaced it with a price-based test in 2021; it remains the most widely cited industry benchmark, and conventional loans can stretch to 45-50 % with strong compensating factors.

How it works

The calculator starts from your gross monthly income, subtracts existing debts (car loans, student loans, credit card minimums), then computes a maximum housing payment at roughly 35 % DTI. That payment is converted into borrowing capacity using the standard amortization formula with the current 30-year fixed rate (6.7 % as of early September 2026 per Freddie Mac's PMMS survey).

Real example

A household earning $8,000/month gross with $400 in existing debts can support a maximum housing payment of about $2,400 ($8,000 × 0.35 − $400). At 6.7 % over 30 years that translates to a mortgage of roughly $372,000. Add a 20 % down payment of about $93,000 and total home budget reaches roughly $465,000 — before property taxes, homeowners insurance and HOA fees, which typically add $500–$1,000/month.

Practical tips

Aim for a 20 % down payment to avoid PMI (Private Mortgage Insurance, roughly 0.5–1.5 % of loan amount per year). Check your FICO score for free at annualcreditreport.com — a score above 740 typically earns the best rates. Pay down credit cards to under 30 % utilization before applying. Get pre-approved (not just pre-qualified) from at least three lenders — federal law allows rate-shopping within 45 days without hurting your credit. Consider FHA loans (3.5 % down) if you're a first-time buyer, or VA loans (0 % down) if eligible.

Disclaimer

This estimate is indicative. Actual approval depends on your credit score, employment history, assets, property appraisal and specific lender overlays. Rates change daily. For binding pre-approval, submit a full application with a licensed mortgage loan originator (NMLS-registered). This tool is not a commitment to lend.

Frequently asked questions

How do US lenders decide how much I can borrow?⌄
Lenders use two debt-to-income (DTI) ratios. The front-end ratio compares your housing payment (principal, interest, taxes, insurance) with gross monthly income and should stay near 28%. The back-end ratio includes all debts — car loans, student loans, credit cards — and is commonly benchmarked at 43%; that was a hard cap for Qualified Mortgages until the CFPB replaced it with a price-based test in 2021, but 43% remains the figure most lenders still cite, with some conventional programs stretching to 45-50% for borrowers with strong compensating factors.
What credit score do I need to maximize my borrowing power?⌄
Conventional loans typically require a minimum score of 620, FHA loans can go as low as 580 with a 3.5% down payment, and VA loans have no fixed minimum. Scores above 760 unlock the best pricing, which lowers your monthly payment and therefore raises the amount you can borrow within the same DTI limit. Improving your score before applying is one of the cheapest ways to increase capacity.
How much of a down payment do I really need?⌄
Conventional loans can start at 3% down for first-time buyers, FHA at 3.5%, and VA or USDA loans at 0% for eligible borrowers. Putting 20% down avoids PMI, which lowers your monthly payment and increases how much house you can afford. Remember to also budget 2-5% of the purchase price for closing costs.
Does student loan debt reduce my borrowing capacity?⌄
Yes. Student loan payments count toward your back-end DTI ratio, directly reducing the mortgage payment you can support. If your loans are in deferment or on an income-driven plan, lenders generally use either the documented payment or a percentage of the balance (often 0.5-1%). Refinancing to a lower payment can meaningfully increase your borrowing capacity.
What is the difference between pre-qualification and pre-approval?⌄
Pre-qualification is an informal estimate based on self-reported figures and carries little weight with sellers. Pre-approval involves a full credit check and verification of income and assets, resulting in a letter stating a specific loan amount. In competitive markets, most sellers will not consider an offer without a pre-approval letter attached.

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