When using the affordability calculator, are we to assume that the price of the home one can afford is the mortgage amount and not the actual price of the home. I did the calculation and my home was 331000 and I put 20% down leaving a mortgage of 264800.00. If I take our combined gross income and multiply it by 2.5 I fall into the correct percentage. But if I do the same calculation I obviously do not qualify to purchase a home that is 331000. Do we use the purchase price or the mortgage amount? Thanks for your assistance.

I find your question a smidgeon confusing and hope that I've captured the essence of it in my answer. If not, drop me another line.

I think what you're asking me is do you base your decision to buy on the actual price of the home or on the amount of mortgage you can get. Am I close?

You have to base it on the amount of mortgage you can get since the lender doesn't give two hoots how much you want to spend, just how much she's willing to lend to you.

If you find that the amount of mortgage you qualify for doesn't get you into the kind of home you want, that's where a downpayment may help. By accumulating a larger downpayment, you can increase the amount of home you can afford to buy since the amount you spend is a combination of the mortgage you qualify for, and the downpayment you've managed to save.