What DTI ratio do lenders use for prequalification?

Many conventional estimates start around 28% front-end DTI and 36% to 43% back-end DTI, while some programs may allow higher ratios with strong credit, reserves, and other compensating factors.

Why can cash available lower my prequalification price?

Cash may need to cover both down payment and closing costs. If the cash available cannot satisfy the minimum down payment plus closing reserve, the estimate can be cash-limited even when income supports a larger payment.

Does this calculator guarantee lender approval?

No. Actual underwriting depends on credit score, verified income, assets, reserves, loan program limits, lender overlays, property type, taxes, insurance, appraisal, and documentation.

Mortgage Prequalification Calculator

Q: Is mortgage prequalification the same as preapproval?

No. Prequalification is an estimate based on stated information. Preapproval usually includes a lender review of credit, income documents, assets, debts, and loan program rules.

Use gross income before taxes and debts that would show up in underwriting, such as auto loans, student loans, card minimums, personal loans, support payments, and other required monthly obligations.

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Income, debt, and cash

Income entry

Gross income ($)

Monthly debt payments ($)

Cash available for purchase ($)

Cash available for down payment and closing reserve.

Loan and property assumptions

Credit score band

Loan program assumption

Interest rate (%)

Loan term (years)

Property tax rate (%/year)

Homeowners insurance ($/year)

HOA dues ($/month)

Mortgage insurance (%/year)

Minimum down payment (%)

Closing cost reserve (%)

Target front-end DTI (%)

Target back-end DTI (%)

Optional desired price ($)

Plain-English recommendation

Enter your numbers to see which constraint is doing the work.

Methodology

The estimate starts with the lower of two payment limits: front-end DTI times gross monthly income, or back-end DTI times gross monthly income minus existing monthly debts.

It then back-solves the highest purchase price that fits that housing payment and the cash available. The payment includes principal and interest, property taxes, homeowners insurance, HOA dues, and estimated mortgage insurance when loan-to-value is above 80%.

Cash available is reserved for closing costs first, then the remaining cash is used for down payment. If the minimum down payment plus closing reserve is tighter than DTI, the result is diagnosed as cash/down-payment constrained.

Important caveats

Prequalification is not preapproval. Preapproval usually requires a lender to review credit, income documents, asset statements, debts, and borrower history.
Credit score, reserves, employment type, bonus or commission income, self-employment history, recent debt, and documentation can change the result.
Loan program rules and lender overlays can be stricter than the DTI targets entered here. FHA, VA, USDA, jumbo, condo, and non-QM loans can all differ.
Property taxes, homeowners insurance, flood or fire coverage, HOA dues, and mortgage insurance vary by location and property. Local numbers matter.
Only an official lender underwriting decision can confirm approval, loan amount, rate, terms, and property eligibility.

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Frequently asked questions

Is mortgage prequalification the same as preapproval?

No. Prequalification is a planning estimate from stated inputs. Preapproval usually means a lender reviewed credit, documents, assets, debts, and program rules.

What DTI ratio should I use?

Common starting points are 28% front-end and 36% to 43% back-end. Some programs allow higher ratios, but the approval is more dependent on credit, reserves, and compensating factors.

Why does cash limit the result?

Cash must usually cover closing costs and down payment. If cash is thin, the price can be capped by minimum down payment even when income supports a larger payment.

Does this replace a lender quote?

No. Use it as a screen before talking with lenders. Underwriting, pricing, documentation, property details, and lender overlays control the real result.