Preapproval Mortgage Calculator
Before you tour a single house, you need one number: the maximum price a lender will likely approve. This mortgage preapproval calculator works backward from your income and debts using the 28/36 rule lenders actually apply, then converts that budget into a max home price with taxes, insurance, HOA and PMI accounted for. It also tells you which ratio is holding you back: your income or your debts.
Quick Answer
With $110,000 of income, $800 in monthly debts and $40,000 down at 6.75% APR, the 28% front-end rule allows $2,566.67/month for housing while the 36% back-end rule allows $2,500/month. The back-end ratio binds, supporting a loan of $289,744 and a max home price of $329,744, with about $46,595 cash needed to close. Your debts, not your income, are the limit.
- Two ratios decide your price. Lenders cap housing at 28% of gross monthly income and all debts at 36%. The lower of the two caps wins.
- Debts shrink the house more than rates do. Every $100 of monthly debt cuts roughly $14,500 of buying power at 6.75% over 30 years.
- Taxes, insurance, HOA and PMI all count. They come out of the same housing budget as principal and interest, so high-tax areas buy less house.
- Pre-approval is verified; pre-qualification is not. A pre-approval letter means the lender checked your documents and credit, which is why sellers take it seriously.
The 28/36 rule: the two numbers lenders actually use
Lenders do not approve a price, they approve a monthly payment, and they measure it two ways. The front-end ratio caps your total housing payment (principal, interest, taxes, insurance, HOA, PMI) at 28% of gross monthly income. The back-end ratio caps your housing payment plus all other monthly debts at 36%. Whichever produces the smaller housing budget is the binding constraint.
Notice how the example flips: income alone would support $2,566.67 of housing, but $800 in monthly debts pulls the back-end cap down to $2,500. That $66.67 monthly gap erases about $9,700 of home price. This is why paying down a car loan before house hunting can raise your preapproval more than finding a slightly lower rate. To see exactly how debt paydown moves the ratio, try our debt headroom calculator.
How your max price is found, step by step
The calculator runs the same sequence an underwriter follows, just faster:
Monthly income. $110,000 a year becomes $9,166.67 a month. Lenders use gross income before tax.
Both ratio caps. 28% gives $2,566.67 for housing; 36% minus $800 of debts gives $2,500. The lower number, $2,500, is your housing budget.
Strip out taxes, insurance and HOA. $350 tax plus $150 insurance leaves $2,000 for principal, interest and PMI. These costs come out of the same budget, which is why the estimate asks for them.
Convert the payment to a loan, then add the down payment. At 6.75% over 30 years with PMI estimated at 0.5% yearly, $2,000 a month supports a $289,744 loan. Add $40,000 down for a $329,744 max price.
Once you have a target price, see what the monthly payment looks like in detail with our mortgage payment calculator.
How sensitive is your max price?
Two inputs move the answer more than any others: the rate and your monthly debts. Run the worked example through the calculator with only one input changed at a time and the swings are plain to see.
| Changed input | Max home price | Binding ratio |
|---|---|---|
| APR 6.50% | $336,853 | Debts |
| APR 6.75% (worked example) | $329,744 | Debts |
| APR 7.00% | $322,898 | Debts |
| Debts $700 per month | $339,402 | Income |
| Debts $800 per month (worked example) | $329,744 | Debts |
| Debts $900 per month | $315,257 | Debts |
A quarter point on the rate is worth about $7,000 of house in either direction. Debt is sharper: $100 more of monthly debt costs about $14,500 of price while debts bind. But debt paydown stops helping once monthly debts fall to about $733, because at that point the 28% income cap of $2,567 takes over and the price stays at $339,402 no matter how much further debts fall. That crossover is why the calculator names the binding ratio: it tells you whether paying down debt or raising income is the move that actually buys more house.
Pre-approval is not pre-qualification
The two terms sound alike and lenders sometimes blur them, but they carry very different weight:
- Based on numbers you report yourself
- Little to no paperwork, often no credit check
- Takes minutes; useful for early budgeting
- Carries almost no weight with sellers
- Lender verifies income, assets and debts
- Hard credit inquiry; full document review
- Letter states a specific loan amount
- Typically valid 60 to 90 days
This calculator estimates the pre-approval math, but the real letter requires the document package: pay stubs, W-2s, bank statements and a credit pull. If you are early in the process, our pre-qualify mortgage calculator gives the lighter first-pass estimate.
What rival calculators get wrong
Most preapproval calculators ask for income and spit out a price, skipping the parts that move the number most. The common misses: no back-end ratio, so buyers with heavy debts get an inflated price; no tax, insurance or HOA inputs, so high-cost areas look more affordable than they are; no PMI handling, so sub-20% down payments look cheaper than the lender will allow; and no cash-to-close figure, so buyers discover closing costs at the worst moment. Better-ranking preapproval calculators still tend to stop at income-needed tables: they do not show which ratio binds or break out PMI. This calculator shows both ratios, names the binding one, prices PMI into the loan math, and estimates cash to close, which is the full picture a buyer needs before making an offer.
Frequently Asked Questions
Pre-qualification is a rough estimate from self-reported numbers with little verification. Pre-approval means the lender verified your income, assets and debts, ran a credit check, and issued a letter stating the loan amount you would likely qualify for. Sellers take pre-approval seriously; pre-qualification carries little weight.
Two caps lenders apply: housing costs (principal, interest, taxes, insurance, HOA, PMI) at or under 28% of gross monthly income, and all monthly debts including housing at or under 36%. The lower resulting housing budget is the binding one.
Typically 60 to 90 days. If it expires before you find a home, you can usually renew it with updated pay stubs, bank statements and a fresh credit pull.
Barely. Pre-approval involves a hard inquiry that may cost a few points temporarily, but multiple mortgage inquiries within a 45-day window count as a single inquiry for scoring purposes, so rate shopping is protected.
Not necessarily. The 28/36 caps are lender maximums, not comfort targets. They ignore childcare, savings goals and lifestyle costs. Many buyers are happier near 25% of income on housing even when approved for 28%.
FHA loans allow higher ratios, often 31% front-end and up to 43 to 50% back-end with compensating factors, and down payments as low as 3.5%. The trade-off is mortgage insurance premiums on every FHA loan. HUD publishes the county loan limits each year.
No. Pre-approval is a conditional commitment based on verified information at that point in time. Final approval still depends on the formal application, the home appraisal, and no major changes to your credit or employment before closing. For what the final stage checks, see our home loan approval calculator.
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References
- Experian. Preapproved vs. Prequalified: What’s the Difference?. Accessed October 25, 2026.
- Internal Revenue Service. Publication 936: Home Mortgage Interest Deduction. Accessed October 25, 2026.
- U.S. Department of Housing and Urban Development. FHA Mortgage Limits. Accessed October 25, 2026.
- Consumer Financial Protection Bureau. Owning a Home. Accessed October 25, 2026.
- Consumer Financial Protection Bureau. What is a debt-to-income ratio?. Accessed October 25, 2026.
- U.S. Department of Housing and Urban Development. Buying a Home. Accessed October 25, 2026.
- Mortgage-Info.com. How Much House Can I Afford in 2026? The 28/36 Rule. Accessed October 25, 2026.
- Citizens Bank. Mortgage Prequalification vs. Preapproval. Accessed October 25, 2026.
- Lower.com. Mortgage Preapproval vs. Prequalification: Key Differences. Accessed October 25, 2026.
- Consumer Financial Protection Bureau. Loan Estimate Explainer. Accessed October 25, 2026.