Affordability Calculator with House Poor Risk Score

A pre-approval is a ceiling, not an answer.

Lenders approve buyers up to roughly 43–50% back-end debt-to-income. That ceiling assumes you have no other priorities — no savings goals, no children, no medical emergencies, no career changes, no rate exposure. The number you can actually live with is almost always lower than the number the lender will let you sign for.

This calculator runs three honest tiers — Conservative, Comfortable, Stretch — and grades the comfortable tier with a House Poor Risk Score so you can see what would break first if anything changed.

The comfort band, explained

Each tier is defined by two ratios. The first number is front-end DTI: housing payment as a percent of gross income. The second is back-end DTI: total debt obligations (housing plus car, student, credit) as a percent of gross income.

• Conservative — 25/33. Housing stays under 25% of gross income. Total debt under 33%. This tier leaves room for retirement contributions, real savings, kids' expenses, and a margin for the unexpected. Appropriate when income is variable or you have other major goals.
• Comfortable — 28/36. The historical lender default and the most sustainable for most households. Housing is meaningful but doesn't crowd out everything else. This is where most buyers should aim.
• Stretch — 33/43. The upper limit. Workable for stable, high-savings households with low non-housing debt — risky for everyone else. The risk score should be in the safe zone before considering this tier.

Lender approval vs real affordability

The single biggest mistake in homebuying is treating the pre-approval letter as a target instead of a maximum. Lenders are paid to write loans. They use front-end and back-end DTI ceilings that haven't meaningfully changed since the 1980s, applied to a generation that now carries much more student debt, has much less pension security, and faces a property-tax and insurance environment that's rising faster than wages. Use the lender's number as the maximum the system will let you commit to. Use the comfort band as the number you can actually live with.

Reserves matter as much as price

A $400K home with 12 months of reserves is a different financial position from a $400K home with one month of reserves — even though the monthly payment is identical. Reserves are what carry you through a job loss, a medical event, an HVAC replacement, or a car totaling out at the wrong moment. The Risk Score weights reserve adequacy at 30% for that reason: it's the largest single determinant of whether a payment that's "fine on paper" stays fine when life happens.

The House Poor Risk Score — what's inside

Four factors, weighted to reflect what actually puts homeowners under stress:

• Cash reserves (30%). How many months of full housing cost your liquid reserves cover. 6+ months scores low risk; under 3 scores high.
• Rate sensitivity (25%). The percentage payment increase under a 1-point rate shock. Matters most for ARM holders, near-term refinancers, and anyone in adjustable territory. Even fixed-rate buyers feel this if they need to refinance to access equity.
• Hidden cost exposure (20%). The share of monthly housing cost that isn't principal and interest. Higher exposure means more of your bill is non-discretionary recurring expense (taxes, insurance, HOA, maintenance) that doesn't build equity. Markets like Texas and New Jersey see this run high.
• Stress DTI (25%). Back-end DTI under a stressed rate scenario. This is the lender's real ceiling: when rates climb and you need to refinance or re-qualify, this is the number they look at.

The composite score gives you a single read on whether the home you're considering is likely to leave room in your life for everything else, or quietly take the room.