To calculate your maximum mortgage eligibility based on housing fund contributions, follow these steps: First, determine your total housing fund contributions over the past year, including savings for a down payment, closing costs, or home maintenance. Second, compare this amount to the annual contribution limit set by your mortgage lender, typically 12% of your gross annual income. Third, calculate the maximum allowable contribution by multiplying your monthly housing fund payment by 12. The eligibility limit is the lesser of your total contributions or the lender’s annual cap. Finally, factor in your debt-to-income (DTI) ratio, which should not exceed 43% for conforming loans. Lenders may adjust the limit if your DTI is higher.

This method ensures lenders assess your ability to save while maintaining financial stability. The 12% income cap aligns with IRS guidelines for retirement accounts, though lenders may vary it based on risk. For example, if your gross income is $120,000, the annual contribution limit is $14,400 ($1,200/month). If you contributed $1,500/month ($18,000 annually), your eligibility is capped at $14,400. Data from the Federal Housing Finance Agency (FHFA) shows 68% of borrowers with DTI below 43% qualify for conforming loans, while those exceeding this threshold face stricter limits. The National Housing Finance and Investment Corporation (NHFIC) reports that average housing fund contributions in 2023 were $523/month, or $6,276 annually, reinforcing the 12% benchmark. By prioritizing these metrics, lenders balance savings capacity with repayment risk, ensuring sustainable homeownership.