Thinking about getting a mortgage? How much house will the average bank approve your mortgage for?
TheĀ magic number that lenders use to determineĀ reasonable mortgage amounts is called the Debt-to-Income ratio (DTI). DTI is your monthly debt payments compared to your gross monthly income. In a broader financial context, DTI is sometimes called the Household Debt Service Ratio (DSR).
This view uses your spaceās calculated DTI to estimate an amount mortgage lenders are likely to approve.
Income and savings, as calculated by holdings in this space.
How much money do you make per year, after tax?
How much have you saved to put toward a down payment?
Most lenders dealing with qualified mortgages want to see DTI below 43%, though some loans may stretch to 50% inĀ special cases. While these maximums represent what lenders will approve, financial experts typically recommend keeping DTI belowĀ 36% to maintain financial flexibility and account for life's surprises.
Current DTI ratio
Over the last few decades, average DTI has typically varied between 10-13% (see below), with extremes during subprime mortgages and COVID. Households with no debt, whether renters or owners, bring this figure down significantly. (St. Louis Fed)
On average, Americans (renters or homeowners) spend around 33% on housing, with renters having a higher median housing cost as a percentage of income (31.0%) compared to homeowners (21.1% for homeowners with a mortgage and 11.5% for those without a mortgage) (census.gov).
šļø Results
Estimated monthly payment headroom in your current budget
Initial mortgage principal
Total affordable house price
Disclaimer: This content and any calculations provided are for informational purposes only. The views, calculations, and methodologies expressed are those of the author and do not necessarily reflect those of this platform. Not financial advice. Users are solely responsible for any decisions made based on this information.