- Required income
- The minimum gross annual income at which the housing payment plus your other monthly debts stays within the maximum debt-to-income ratio you entered. The calculator adds PITI and other debts, divides by the DTI limit, and multiplies by 12. It is a qualification floor under that one rule, not a comfortable budget.
- Debt-to-income ratio (DTI)
- Total monthly debt payments, including the new housing payment, divided by gross monthly income. Lenders use it to judge whether you can carry the loan. The 43% default reflects a common guideline tied to the CFPB’s qualified-mortgage rules, not a legal cap; some programs allow more and some lenders set less.
- PITI
- Principal, interest, taxes and insurance: the full monthly housing payment lenders count toward DTI. Here it combines principal and interest on the loan with one-twelfth of the annual property tax and homeowners insurance you enter. HOA dues and mortgage insurance, where they apply, would raise it and the income needed.
- Gross monthly income
- Income before taxes and payroll deductions, divided by 12. Lenders qualify borrowers on gross income, not take-home pay, so ratios based on it look lower than the share of your paycheck the payment will actually consume. The income must generally be stable and documented to count.
- Housing ratio
- The housing payment (PITI) divided by gross monthly income, also called the front-end ratio. This calculator solves for income using total DTI, then reports the housing ratio at that income so you can see how much of the limit housing alone takes up. Some lenders apply a separate cap to this ratio as well.
- Other monthly debts
- Recurring minimum payments that appear on your credit report or are legally required: car loans, student loans, credit-card minimums, personal loans, and support payments. Living expenses such as utilities or groceries are not included. Every $100 of monthly debt raises required income by $100 divided by the DTI limit, times 12.
- Pre-qualification
- An informal lender estimate of how much you may be able to borrow, based on the income, debts and assets you report. It is not a loan commitment. A lender’s full review weighs credit score, down payment, reserves and loan program, all of which can move the income actually required above or below this estimate.
- Interest rate
- The annual note rate on the loan, used to find the principal-and-interest part of PITI. A higher rate raises the payment and therefore the income needed to stay within the DTI limit. On a 30-year loan, a one-point rate increase can raise required income by several thousand dollars a year.
- Loan term
- The number of years over which the loan is repaid. A longer term lowers the monthly principal-and-interest payment and therefore the income required to qualify, at the cost of much more total interest. Choosing a shorter term raises the income bar, since the same loan must be repaid in fewer payments.
