What This Calculator Does
This tool estimates the gross income you need to afford a home, based on the lender's front-end debt-to-income (DTI) ratio. It is geared toward US mortgage guidelines, where the common "28% rule" caps housing costs at 28% of gross monthly income. PITI stands for the four parts of a typical monthly housing payment: Principal, Interest, Taxes, and Insurance — and here we also let you add HOA dues and PMI.
How to Use It
Enter your monthly principal & interest, property tax, home insurance, and any HOA or PMI. Then set the front-end DTI limit your lender uses (28% is standard; conservative buyers may use 25%). The calculator sums your PITI and divides by the DTI fraction to find the monthly income required, then multiplies by 12 for the annual figure.
The Formula
First, total monthly housing cost: \(\text{PITI} = \text{P\&I} + \text{Tax} + \text{Insurance} + \text{HOA/PMI}\). Then the income needed each month is \(\text{PITI} \div \text{DTI}\), and annual income is that figure \(\times 12\).
$$\text{Required Annual Income} = \frac{\text{PITI}}{\text{DTI}/100} \times 12$$For example, if PITI is $1,600 and the DTI limit is 28% (0.28), required monthly income = \(1{,}600 \div 0.28 = \$5{,}714.29\), and annual income = \(\$68{,}571.43\).
Worked Example
Suppose P&I is $1,200, tax $300, insurance $100, and no HOA/PMI, at a 28% DTI. \(\text{PITI} = \$1{,}600\). Monthly income = \(1{,}600 \div 0.28 \approx \$5{,}714\). Annual income \(\approx \$68{,}571\). If you tightened the DTI to 25%, you'd need \(1{,}600 \div 0.25 = \$6{,}400\)/month, or $76,800/year.
FAQ
What is front-end DTI? It's the share of your gross monthly income that goes to housing costs. Many lenders prefer it at or below 28%.
Does this include other debts? No — this is the front-end ratio (housing only). Back-end DTI includes car loans, credit cards, and student loans.
Is this US-specific? The 28%/PITI conventions are US mortgage standards. The math works anywhere, but the typical thresholds reflect US lending norms.
