Real estate & rental
Real Estate Home Affordability Calculator
Works what a buyer can afford, where the lender's limit and a sustainable payment differ.
Result
An arithmetic tool, not financial or legal advice. Lending criteria, tax treatment and tenancy law all vary by state and change regularly. Confirm anything that affects a decision with a lender, an accountant or an attorney. What a lender will approve and what is comfortable are different questions. These ratios are conventional guidelines that vary by loan programme and credit profile, and they take no account of childcare, medical costs, retirement saving or the maintenance a house needs. Borrowing the maximum approved is rarely wise.
Get a Free Business AuditHow the calculation works
Income and existing debts against debt-to-income limits, converted into a supportable payment and from there into a purchase price at the available rate and down payment. The result is what a lender would likely approve, and lenders set their own ratios by programme, so the figure is indicative rather than a decision.
What moves the number
- Gross income and existing monthly debt obligations.
- The debt-to-income ratio the lender applies.
- Rate, which changes the price a given payment supports.
- Property taxes and insurance for the specific area.
Where this one goes wrong
A lender's maximum and a sustainable payment are different numbers, because the ratios consider debts that appear on a credit report and not childcare, commuting, retirement saving or the maintenance a house requires. Buying at the maximum leaves no room for the water heater. The other point is that the price a payment supports moves with rates, so an affordability figure calculated weeks ago may no longer hold and is worth recalculating at the rate actually available.
Before you quote
- Budget from what you can sustain, not the lender's maximum.
- Include maintenance, which renting did not require.
- Recalculate at the rate actually available now.
Where the rules come from
Questions
About this calculator
Should I buy at the maximum a lender approves?
The ratios consider debts on a credit report, not childcare, commuting, retirement saving or house maintenance. Buying at the maximum leaves nothing for the water heater, which is why a sustainable payment is usually below the approved one.
Why did my affordability change?
Rates, most likely, since the price a given payment supports moves with them. An affordability figure from a few weeks ago may no longer hold, and recalculating at the rate actually available is worth doing before making an offer.
What do buyers forget to budget?
Maintenance and repairs, which a renter never paid, plus the property tax and insurance differences between the places they are comparing. Those are the items that turn an affordable purchase into a stretched one in the first couple of years.
The formula
maximum payment is the lower of the housing ratio and the total debt ratio, then solved back to a price
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How to use this calculator
- Gross annual household income ($). Enter your own figure; the page starts at $110,000.
- Other monthly debt payments ($). Car loans, student loans, credit card minimums.
- Cash for the down payment ($). Enter your own figure; the page starts at $84,000.
- Interest rate (%). Enter your own figure; the page starts at 6.8%.
- Term (years). Enter your own figure; the page starts at 30.
- Housing ratio limit (%). Housing cost as a share of gross income.
The result updates as you type, so you can try a figure, see what it does to price you can likely afford, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Gross annual household income | $110,000 |
| Other monthly debt payments | $620 |
| Cash for the down payment | $84,000 |
| Interest rate | 6.8% |
| Term (years) | 30 |
| Housing ratio limit | 28% |
| Total debt ratio limit | 36% |
| Taxes and insurance as a share of price | 1.7% |
What comes out
| Result | Value |
|---|---|
| Price you can likely afford main result | $392,429 |
| Maximum monthly housing payment | $2,566.67 |
| Maximum loan | $308,429 |
| Limited by | the housing ratio |
| Gross monthly income | $9,167 |
A lender would likely approve around $392,429, with a housing payment up to $2,566.67 a month. You are limited by the housing ratio.
How sensitive the answer is
Holding everything else steady and changing only gross annual household income, this is what happens to price you can likely afford. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Gross annual household income ($) | Price you can likely afford |
|---|---|
| $55,000 | $198,795 |
| $82,500 | $302,752 |
| $110,000 example above | $392,429 |
| $165,000 | $554,141 |
| $220,000 | $715,853 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Gross annual household income ($)
- A money amount, starting at $110,000.
- Other monthly debt payments ($)
- Car loans, student loans, credit card minimums.
- Cash for the down payment ($)
- A money amount, starting at $84,000.
- Interest rate (%)
- A percentage, between 0 and 20, starting at 6.8%.
- Term (years)
- A number, between 0 and 50, starting at 30.
- Housing ratio limit (%)
- Housing cost as a share of gross income.
- Total debt ratio limit (%)
- A percentage, between 0 and 60, starting at 36%.
- Taxes and insurance as a share of price (%)
- A percentage, between 0 and 6, starting at 1.7%.
What the results tell you
| Result | What it is |
|---|---|
| Price you can likely afford | The headline result. A money figure. |
| Maximum monthly housing payment | A money figure. |
| Maximum loan | A money figure. |
| Limited by | A category or planning selection, rather than a measured quantity. |
| Gross monthly income | A money figure. |
What is not in this number
Property figures here exclude the costs that decide whether a deal works: vacancy, maintenance, management, capital expenditure and the transaction costs at both ends. A return that looks strong before those frequently does not survive them.
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