What is PMI and when does it drop off?

PMI protects the lender when down payment is below 20%. In the US it auto-cancels at 78% LTV; you can request removal at 80%.

Home Loan & Mortgage Affordability Tool

Q: What percentage of income should go toward a mortgage?

The 28/36 rule: housing costs under 28% of gross monthly income, total debt payments under 36%.

Q: 15-year vs 30-year mortgage?

15-year typically saves 50-60% total interest at a lower rate, but monthly payment is 50% higher. 30-year offers more flexibility.

Q: Should I make extra mortgage principal payments?

Yes - one extra payment per year can shave 4-6 years off a 30-year loan and save tens of thousands in interest.

Currency

Gross Annual Income

Monthly Debt Payments (loans, credit cards)

Down Payment Available

Annual Interest Rate (%)

Loan Tenure (Years)

DTI Limit (%) — max debt-to-income (recommended 36-43%)

About the Mortgage Affordability Calculator

The Mortgage Affordability Calculator helps you determine the maximum home price you can comfortably buy based on your income, existing debts, down payment, interest rate, and loan tenure. It uses the standard debt-to-income (DTI) limit to compute the largest monthly EMI you can sustain, then back-calculates the maximum loan amount and home price accordingly. First-time home buyers and anyone looking to refinance or upgrade their home will find this tool essential for setting a realistic property budget.

How to Use

Enter your Gross Annual Income and any existing monthly debt payments (car loan, credit cards).
Specify your available Down Payment and the expected Annual Interest Rate.
Set the Loan Tenure in years and adjust the DTI Limit (36–43% is recommended).
Click Calculate Affordability to see your maximum home price, EMI, and total interest cost.

Formula / Methodology

EMI = P × [r(1+r)^n] ÷ [(1+r)^n − 1]

Where:
  P = Loan Principal
  r = Monthly interest rate (Annual Rate ÷ 12 ÷ 100)
  n = Loan tenure in months

Max Home Price = Max Loan Amount + Down Payment
LTV Ratio = Loan Amount ÷ Home Price × 100
DTI Ratio = Total Monthly Debt ÷ Monthly Income × 100

Amortization means each EMI pays a shrinking share of interest and a growing share of principal over time. Early in the loan, most of your payment is interest; by the end, most is principal repayment.

Understanding Your Results

Monthly EMI Your fixed monthly mortgage payment covering both principal and interest. This should ideally stay within 28–30% of your gross monthly income for a comfortable financial position.

Total Interest Paid The cumulative interest cost over the full loan tenure. Even a 0.5% reduction in interest rate or a few extra EMIs paid early can save a significant amount — consider prepayment whenever possible.

DTI Ratio Debt-to-Income ratio is the key metric lenders use to assess loan eligibility. A DTI below 36% is excellent; most lenders cap approval at 43–50%. Keeping DTI low improves your loan terms and financial safety.

Frequently Asked Questions

What percentage of income should go toward a mortgage?

A widely-used rule is the 28/36 rule: housing costs (PITI) should not exceed 28% of gross monthly income, and total debt payments should stay under 36%. Some lenders allow higher Debt-to-Income ratios, but staying conservative leaves room for savings and emergencies.

15-year vs 30-year mortgage — which is better?

A 15-year mortgage typically offers a 0.5–1% lower rate and saves 50–60% in total interest, but the monthly payment is ~50% higher. Choose 15-year if you can afford it without straining your budget; choose 30-year if flexibility and lower payments matter more.

What is PMI / mortgage insurance and when does it drop off?

Mortgage insurance (PMI in the US, LMI in Australia) protects the lender when your down payment is below 20%. It typically auto-cancels at 78% loan-to-value (US); you can request removal at 80%. UK and Indian markets handle this differently via lender margin pricing.

Should I make extra principal payments?

Yes — even one extra payment per year can shave 4–6 years off a 30-year loan and save tens of thousands in interest. The earlier in the loan you pay extra, the more you save, because early payments are mostly interest.

Important Note

The calculated home price covers the loan repayment only. Budget for additional homeownership costs — property tax, home insurance, maintenance, HOA/society charges — which can add 1–3% of property value per year. Always keep a financial buffer.

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