DMV Home Affordability Calculator Methodology - The Downs Mortgage Group

This home affordability calculator for Washington DC, Maryland, and Virginia homebuyers calculates three qualification tiers based on debt-to-income (DTI) ratios used in conventional mortgage underwriting: Conservative (36% DTI), Standard (45% DTI), and Maximum Approval (50% DTI, achievable through automated underwriting systems). It also models FHA qualification, which permits up to a 57% total debt-to-income ratio provided the housing payment does not exceed 47% of gross monthly income, subject to FHA loan limits.

Maximum purchase price deploys the buyer's full available cash: the down payment equals total cash minus estimated closing costs of 3% of the purchase price, and the calculator iteratively solves the total housing payment equation (principal and interest, mortgage insurance tiered by the resulting down payment percentage, property taxes at 1.05% of sale price in Maryland and Virginia or 0.85% in Washington DC, homeowners insurance at 0.25% of sale price, and HOA dues) for the maximum sale price at each DTI tier. A minimum down payment acts as a floor - 5% for repeat buyers or 3% for first-time buyers: when cash is the limiting factor, maximum price equals total cash divided by the minimum down payment percentage plus 3% closing costs (for example, 5% down divide by .08, following the standard cash-to-price factors). The Maximum Approval tier automatically compares the conventional result against an FHA structure (3.5% minimum down, 1.75% upfront mortgage insurance premium financed into the loan, 0.55% annual MIP, subject to FHA loan limits) and displays whichever structure supports the higher purchase price, clearly labeled. FHA often wins for cash-constrained buyers because of its lower minimum down payment, and for income-stretched buyers because of its higher 57% back-end DTI allowance with the 47% front-end housing cap.

The calculator also reverse-engineers a target purchase price from the buyer's comfortable monthly payment using the same full-cash-deployment method, since most DMV buyers qualify for more than they wish to spend. Loans above $806,500 are flagged as high-balance and loans above $1,209,750 as jumbo, where debt-to-income limits are typically stricter. Estimates are educational; actual qualification depends on credit, full underwriting, and current program guidelines. Created by John Downs, Certified Mortgage Advisor, Senior Vice President, Vellum Mortgage, NMLS 182775, serving the DC, Maryland, and Virginia market.