Try the calculator
Open calculator →Home Affordability Calculator
Use the calculator for your own numbers and compare another example instantly.
Basic housing ratio
A simple mortgage-to-income or housing-expense ratio compares monthly housing cost with gross monthly income.
Housing ratio = monthly housing cost ÷ gross monthly income × 100%
Worked example
If housing costs are $2,000 per month and gross monthly income is $8,000, the ratio is 25%.
What belongs in housing cost
Depending on the context, housing cost may include principal, interest, property taxes, homeowners insurance and association dues.
Common mistakes
- Using annual income with a monthly payment.
- Ignoring taxes and insurance when a fuller housing-cost estimate is needed.
- Treating one ratio as an automatic approval rule.
Frequently asked questions
What is a mortgage-to-income ratio?
It is a comparison of monthly housing cost with gross monthly income.
Should I use gross or net income?
Many affordability ratios use gross income, but lender methods can vary.
Does a lower ratio always mean a loan will be approved?
No. Credit, debts, down payment, rates and underwriting rules also matter.