What is DTI and what is the maximum allowed?

DTI is your total monthly debt payments divided by your gross monthly income. For most conventional loans the standard back-end limit is 43%. FHA loans can approve up to 50% DTI with compensating factors.

What is the difference between FHA and conventional loans?

Conventional loans require a minimum 620 credit score and 3% down. FHA loans allow 580 credit score with 3.5% down but carry MIP of 1.75% upfront plus 0.55% annually for the life of the loan.

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Q: How much house can I afford on a $100,000 salary?

At $100,000/year, the 28% front-end guideline allows $2,333/month for housing costs. At 6.75% on a 30-year loan with 10% down, that translates to roughly a $280,000–320,000 home depending on your other debts.

Q: What is PMI and how do I avoid it?

PMI is required on conventional loans when your down payment is under 20%, typically costing 0.5–1.5% of the loan annually. To avoid PMI: put 20% down, use a VA loan, or use a piggyback loan structure.

Q: Should I get a 15-year or 30-year mortgage?

A 15-year mortgage has a lower rate but roughly 40–50% higher monthly payment. A 30-year mortgage has a lower payment. If you can comfortably afford the 15-year payment and plan to stay long-term, it saves significant interest.

DTI ratio, monthly PITI breakdown, max home price, PMI, and stress test — for conventional, FHA, and VA loans. Updated for 2026.

DTI Ratio Conventional · FHA · VA PMI / MIP Max Home Price Stress Test Monthly PITI Breakdown

Your Details

Income & Debts

Annual Gross Incomehousehold total

Monthly Debt Paymentscar, student, credit cards

Monthly HOA / Othercondo fees, etc.

Loan Details

Home Purchase Price$

Down Paymentmin 3% conventional

Interest Rate30yr avg ~6.5–7%

Loan Termyears

Monthly Costs

Annual Property Tax RateUS avg ~1.1%

Annual Homeowners Insuranceavg $1,500–2,500/yr

Stress Test

Rate Increase Scenarioabove contract rate

↓ Methodology ↓

How this calculator works — formulas & sources

Monthly Principal & Interest (P&I)

M = L × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]
L = loan · r = monthly rate · n = term × 12

Standard amortization formula used by all US lenders. FHA adds 1.75% upfront MIP to the loan balance before applying. VA adds 2.15% funding fee (first use).

Front-End DTI

Front DTI = Monthly PITI ÷ Gross Monthly Income

≤28% excellent · ≤36% good · ≤43% standard limit. PITI = P&I + Property Tax + Insurance + PMI/MIP + HOA. Source: Fannie Mae Selling Guide B3-6-02.

Stress Test

Stress DTI = back-end DTI recalculated at (Rate + Buffer)

Default buffer: +2%. Shows how DTI changes if rates rise — relevant for ARM products. Based on PRA SS13/16 affordability stress methodology adapted for US context.

PMI & MIP

Conventional PMI ≈ loan × 1.0% ÷ 12
FHA Upfront MIP = loan × 1.75%
FHA Annual MIP = loan × 0.55% ÷ 12
VA Funding Fee = price × 2.15%

PMI uses 1.0% mid-range estimate — actual varies by lender and credit score. FHA MIP per HUD Mortgagee Letter 2023-05. VA fee per 38 CFR §36.4312.

Back-End DTI

Back DTI = (PITI + All Monthly Debts) ÷ Gross Monthly Income

Conventional max: 43% standard, 50% with DU approval. FHA max: 50% with compensating factors. VA: most lenders cap at 41–50%.

Maximum Home Price

Max PITI = Gross Monthly Income × 0.28
Max Price = Max Loan ÷ (1 − down%)

Derived from the 28% front-end DTI guideline. Actual approval depends on full underwriting — credit score, assets, property type, and lender criteria.

Sources: Fannie Mae Selling Guide B3-6-02 · HUD Mortgagee Letter 2023-05 · VA Lenders Handbook Ch.4 · CFPB 12 CFR §1026.43 · FHFA 2026 conforming limit $806,500

Last reviewed: April 2026

Affordability Results

Total Monthly PITI

—

⬤ Calculating…

DTI Ratios

Front-End DTI (housing only) —

0%28%36%50%

Back-End DTI (all debts) —

0%36%43%50%

Max Home Price

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at 43% back-end DTI

Stressed DTI

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at +2% rate

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How it works

The numbers that determine approval

Lenders don't just look at your income. They look at your DTI, your loan type, and whether your payment survives a rate increase.

01 — FRONT-END DTI

Housing costs only

Front-end DTI includes only your housing payment — principal, interest, property tax, homeowners insurance, and HOA. Guideline: under 28%. FHA allows up to 31%. Exceeding this doesn't automatically disqualify you but triggers additional scrutiny.

02 — BACK-END DTI

All debts combined

Back-end DTI is the number that determines approval. Standard limit is 43% for Qualified Mortgages. FHA and VA can go to 50% with compensating factors (large reserves, high credit score). Above 50% and most lenders decline regardless of income.

03 — PMI & MIP

The cost of a small down payment

Conventional loans require PMI when your down payment is under 20% — typically 0.5–1.5% of the loan annually. FHA loans have MIP regardless of down payment: 1.75% upfront (added to the loan) plus 0.55% annually. VA loans have no PMI — a major advantage for eligible borrowers.

04 — LOAN TYPES

Conventional vs FHA vs VA

Conventional loans offer the best rates for borrowers with 740+ credit and 20%+ down. FHA loans allow lower credit scores (580+) and smaller down payments (3.5%) but carry lifetime MIP. VA loans offer 0% down and no PMI for eligible veterans — often the best product available if you qualify.

05 — STRESS TEST

Can you handle a rate increase?

Adjustable-rate mortgages and future refinances will be subject to whatever rates exist at that time. The stress test shows your DTI at a higher rate — typically the CFPB uses the contract rate plus 2% for ability-to-repay calculations. If your DTI passes at the stressed rate, you have genuine payment flexibility.

06 — MAX HOME PRICE

What the math actually allows

The max home price calculation solves backwards from the 43% DTI limit — given your income, existing debts, down payment, rate, property tax, and insurance, what's the highest price where your payment still qualifies? This is the number your lender uses, not what a listing agent tells you.

FAQ

Common questions

How much house can I afford on a $100,000 salary?

At $100,000/year ($8,333/month), the 28% front-end guideline allows $2,333/month for housing costs (PITI). At 6.75% on a 30-year loan with 10% down, 1.1% property tax, and $150/month insurance, that translates to roughly a $280,000–320,000 home depending on your other debts. With 20% down and no other debts, you could qualify for up to ~$380,000 using the 43% back-end limit. Use the calculator above with your actual debt payments for a precise number.

What is DTI and what's the maximum allowed?

DTI (Debt-to-Income ratio) is your total monthly debt payments divided by your gross monthly income. There are two types: front-end DTI (housing costs only) and back-end DTI (all debts). For most conventional loans, the standard back-end limit is 43%. FHA loans can approve up to 50% DTI with compensating factors. VA loans are flexible but most lenders cap at 41–50%. Above 50% DTI, approval becomes very difficult regardless of loan type.

What is PMI and how do I avoid it?

PMI (Private Mortgage Insurance) is required on conventional loans when your down payment is under 20%. It typically costs 0.5–1.5% of the loan amount annually — on a $360,000 loan that's $150–450/month added to your payment. To avoid PMI: put 20% down, use a VA loan (no PMI regardless of down payment), use a piggyback loan (80/10/10 structure), or pay it upfront. Once your loan reaches 80% LTV, you can request PMI removal; it automatically cancels at 78% LTV by law.

What's the difference between FHA and conventional loans?

Conventional loans are backed by Fannie Mae/Freddie Mac and require a minimum 620 credit score (740+ for best rates) and 3% down payment. FHA loans are government-backed and allow 580 credit score with 3.5% down (or 500+ with 10% down). FHA is more forgiving but comes with MIP — an upfront fee of 1.75% of the loan amount rolled into the balance, plus 0.55% annually for the life of the loan. For borrowers with strong credit and a 20% down payment, conventional is almost always cheaper. For first-time buyers with limited savings or lower credit, FHA is often the only realistic option.

Should I get a 15-year or 30-year mortgage?

A 15-year mortgage has a lower interest rate (typically 0.5–0.75% less than 30-year) and builds equity much faster — but the monthly payment is roughly 40–50% higher. A 30-year mortgage has a lower payment, leaving cash for investing, emergencies, or other debts. If you can comfortably afford the 15-year payment and plan to stay in the home long-term, it saves significant interest. If the 15-year payment would stretch your DTI above 36%, the 30-year is the safer choice — you can always make extra principal payments when cash flow allows.

What are closing costs and how much should I budget?

Closing costs are fees paid at the time of purchase, separate from your down payment. For buyers, expect 2–5% of the purchase price. On a $450,000 home that's $9,000–22,500. Key components: loan origination fee (0.5–1%), appraisal ($500–800), title insurance ($1,000–3,000), escrow setup, prepaid property taxes, homeowners insurance, and prepaid interest. Some closing costs are negotiable — compare Loan Estimates from multiple lenders. Sellers can also contribute to closing costs (seller concessions) — ask your agent about this in your market.