Find out how much house you can afford based on your income and expenses.
Click "Calculate affordability" to see your full breakdown
Result = Financial inputs processed using the applicable rate, payment, compounding or cash-flow relationship shown by this calculator.The result combines the values requested by the tool, which may include price, income, rent, financing, taxes, fees, maintenance or time. An omitted recurring cost or an unrealistic growth assumption can materially change the comparison.
Our House Affordability Calculator suggests a price of home that you might be able to buy according to your income and monthly debts, the deposit required, any assumptions about mortgage terms and any other costs of owning a home. The calculator shows loan amounts and estimates of monthly payments based on various inputs – for comparison of prices, possible loan sums and overall outgoings. This is not the same as a loan amount approved by a mortgage lender, as house buying capability depends on other factors as well, such as your credit rating, interest rates, local property taxes and homeowners’ insurance rates, the specific loan type you choose, and lender’s risk assessments.
How A House Affordability Calculator Works A house affordability calculator will suggest a house price based upon how much your monthly housing costs will fit in relation to the input assumptions & information provided in the calculator; it will then adjust this based on non-monthly housing expenses and translate the residue of cash that is available to P&I into an estimated loan balance and then add up the down-payment in order to arrive at an estimatedpurchase price.
The accuracy calculation is only dependent on what we can provide. Most loan affordability calculators are started by entering in income and monthly debts you own, other loan affordability calculators let the buyer define how much they would like to spend on a monthly mortgage. Other factors like insurance, property taxes, and HOA (homeowners’ association) dues may also be factored in the buyer’s monthly housing expense range before a loan amount would be presented.
An exact (one-size-fits-all) affordable house price formula doesn't exist because what defines housing affordable is based on a few calculations and educated guesses. For example, here's one approach to calculating affordable housing: First find how much you could afford to pay monthly towards your housing, deduct your housing's non-mortgage housing costs (such as homeowner’s insurance and property tax), then calculate the mortgage amount that can be supported by what's left for your principal and interest.
For a fixed-rate, fully amortizing mortgage, the principal-and-interest payment can be calculated as:
M = P × r × (1 + r)n ÷ ((1 + r)n − 1)
When estimating mortgage affordability the formula could be adjusted to calculate how large a mortgage principal you could afford on a certain budget payment for your monthly principal-and-interest:
P = M × (1 − (1 + r)−n) ÷ r
The estimated home price can then be expressed as:
Estimated Home Price = Estimated Mortgage Amount + Down Payment
If financed closing costs or other amounts are included in the loan, the relationship between loan amount and purchase price may differ.
Consider a buyer who wants to limit total monthly housing costs to $2,400. Assume the buyer plans to make a $60,000 down payment and is evaluating a 30-year fixed-rate mortgage at 6.5%.
First, subtract the recurring housing expenses from the total monthly housing budget:
$2,400 − $500 − $150 − $100 = $1,650
Using a 6.5% annual rate over 360 monthly payments, a principal-and-interest payment of $1,650 supports an estimated mortgage balance of approximately $261,048.
Adding the $60,000 down payment produces an estimated purchase price of:
$261,048 + $60,000 = $321,048
An example that demonstrates why the payment itself does not dictate affordability Taxes, insurance, HOA fees, etc. Reduce the amount you’re able to put towards principal and interest in a monthly housing budget. Lender estimates and the reality of expenses associated with a specific home may differ.
Your Estimated Purchase price is based on the numbers input into the calculator and is meant to be a reference only, not a firm limit on the home price, or the mortgage.
| Input | Typical Effect on Estimated Affordability |
|---|---|
| Higher income | May increase the amount available for housing |
| Higher monthly debts | May reduce estimated affordability |
| Larger down payment | Can increase the purchase price supported by the same mortgage amount |
| Higher mortgage rate | Usually reduces the mortgage amount supported by the same monthly payment |
| Higher property taxes | Reduces the portion of the housing budget available for principal and interest |
| Higher insurance or HOA costs | Can reduce estimated affordable home price |
| Longer loan term | Usually lowers the payment for the same loan amount, but can increase total interest |
Available cash flow each month for housing, in addition to income, while existing monthly debt payments decrease the available balance for a mortgage payment, plus house costs. While a mortgage calculator includes both numbers, changing the income number may materially alter the price.
For example, 2 potential buyers with the same annual income could be given different levels of affordability by the same calculation if one of those buyers has considerably higher recurring monthly debts than the other. As a result, you will need to fill in the calculator with the appropriate payment amounts rather than the amount of outstanding debt, not a maximum balance.
The relationship between the mortgage interest rate and the mortgage amount is a direct. For a given monthly principal-and-interest budget, as the rate increases, a larger portion of that payment will need to service the interest component, leaving generally less to amortize the mortgage principal.
| Interest Rate | Monthly Principal and Interest Budget | 30-Year Mortgage Amount |
|---|---|---|
| 5.5% | $1,650 | Approximately $290,500 |
| 6.5% | $1,650 | Approximately $261,000 |
| 7.5% | $1,650 | Approximately $236,000 |
These scenarios also indicate rate sensitivity and are not the current rate quotes you see advertised. Mortgage rates vary depending on the borrower, lender, type of loan and market environment.
When there is a down payment, there is an interplay between how much the house costs and the size of the mortgage needed. Assuming the size of the mortgage is constant, raising the size of the down payment, it tends to allow for a larger purchase price to be supported.
For example, if a payment scenario supports a $300,000 mortgage:
| Down Payment | Estimated Purchase Price |
|---|---|
| $20,000 | $320,000 |
| $40,000 | $340,000 |
| $60,000 | $360,000 |
| $100,000 | $400,000 |
This simplified analysis assumes we financed $300,000 each. Of course there could be other expenses involved like closing costs, lender, program requirements, private mortgage insurance, etc. That are also part of the financing.
While the house price on its face may appear cheap using only principal and interest, it may not remain so affordable once predictable, recurring housing costs are factored in, and property taxes, homeowner's insurance, HOA fees, and mortgage insurance eat up aportionof the monthly housing allocation.
If, for example, the potential borrower can afford a $3,000 house payment per month but can figure in about $850 for property taxes, insurance, HOA fees, or other covered home operating costs, this leaves just $2,150 a month toward actual mortgage payments.
Use property-specific estimates when available because these costs can vary considerably between homes and locations.
If the tax form asks for gross income, enter your income before all taxes (federal, state, local, payroll, retirement, insurance, medical etc). This is not the amount of money you actually take home if the form asks for income.
Even with gross income figures, home buyers may also wish to compare the monthly payment calculation with their actual cash flow. Two families that have the same income could have very different net incomes and could spend significantly different amounts on non-housing expenses.
Calculator estimate vs loan approval in loan application Calculator provide You the planning estimate based on inputs you provide from calculator in loan application may other factors ( such as your validated income, financial records, available funds, outstanding debts, house size, type of loan, interest rates, among additional lending underwriters) review by the bank.
As a result, the amount a calculator estimates you can afford may be higher or lower than the amount a lender ultimately approves.
Scenario testing can be especially useful when comparing a larger down payment with a lower-priced home or evaluating how a change in mortgage rate affects purchasing power.
Home-price range: Your mortgage amount will depend on your income, debt, down payment, interest rate, loan term, property taxes, insurance, HOA dues, and various other assumptions. Realistic numbers input into the House Affordability Calculator will yield an estimate of a suitable home-price range.
Yes it is possible. A larger initial deposit will mean a smaller amount of finance needed for the same purchase price, and assuming everything else is equal it will enable a greater purchase price to be financed with the same size mortgage loan.
Higher rate of interest increases the monthly installments that you have to pay for the same loan amount. This implies that, if your budget for housing expenses month on month does not change, you have a relatively lower budget for amount that can be borrowed from.
That depends on whether the calculator will accept that input. Property taxes will be accounted for in housing as a fixed cost that will eat up how much of the monthly mortgage can go toward principal and interest.
In many cases, yes, especially if the property has recurring HOA dues and the calculator has HOA line field available. You may be overestimating the amount that is available for other housing related expenses if you exclude those amounts.
Unless explicitly part of available inputs or calculation logic. A simplistic affordability figure might ignore cash requirement at closing in addition to the down payment.
Start with current verified costs, then test a higher rate, a different down payment or a change in rent and ownership expenses. Compare the full scenario rather than focusing on one monthly figure.
A good way to test affordability is to determine your monthly mortgage payment from a set monthly housing budget. Less the amount in property taxes, homeowner's insurance, HOA fees, and/or private mortgage insurance is left for principal and interest.
| Monthly Housing Budget | Other Monthly Housing Costs | Amount Available for Principal & Interest |
|---|---|---|
| $2,000 | $500 | $1,500 |
| $2,500 | $600 | $1,900 |
| $3,000 | $700 | $2,300 |
| $3,500 | $800 | $2,700 |
This comparison is an illustration. The actual amount that a mortgage is considered affordable is determined by interest rate, loan term, down payment, and all the inputs entered into the calculator.
My estimated value and your estimated mortgage loan are related, though they are not exactly the same number. The mortgage is what you are borrowing, the purchase price is your down payment + the loan.
Purchase Price = Mortgage Amount + Down Payment
If the mortgage amount is $280,000 and the down payment is $70,000, and if other amount is notfinanced, then the price would be $350,000.
Existing monthly debt obligations will take up part of the money available for a house. If one buyer has the same income and same amount put towards the down payment as another, their affordability estimate might differ.
| Monthly Income | Monthly Debt Payments | Effect on Affordability |
|---|---|---|
| $8,000 | $500 | More income remains after existing debt |
| $8,000 | $1,000 | Less income remains after existing debt |
| $8,000 | $1,500 | Less income remains available for housing |
When using the calculator please enter the periodic debt payments in the unit that is asked for not the present outstanding debts.
Property taxes can make two homes with the same purchase price have different monthly housing costs. If taxes are included in the affordability calculation, a higher estimated tax expense leaves less of the housing budget available for mortgage principal and interest.
For example, if your monthly housing budget is $3,000 and expected property taxes are going from $400 a month to $600 a month, then that takes $200 out of your pocket each month for any other housing related needs and principle and interest on the mortgage.
The down payment also affects the percentage of the home's purchase price that is financed. A simplified loan-to-value calculation is:
LTV = Mortgage Amount ÷ Home Purchase Price × 100
For instance, a mortgage that costs $320,000 on a house that costs $400,000 will have a loan-to-value ratio of 80%. The other $80,000 is equal to a 20% down payment and this can also be assuming there's not anything else that is being borrowed.
LTV is not the same as affordability. Some buyers can have a large deposit and a low monthly payment to meet a fixed expenditure for income, which still doesn't match their circumstances.
Instead of using just one estimate for the payments, see how it changes if you use a different price for a house. This is handy when taxes, insurance and HOA fees are going to be different on each property you're considering.
| Home Price | Down Payment | Mortgage Amount |
|---|---|---|
| $300,000 | $60,000 | $240,000 |
| $350,000 | $60,000 | $290,000 |
| $400,000 | $60,000 | $340,000 |
| $450,000 | $60,000 | $390,000 |
This simplified comparison does not take in to account that this comparison includes 60,000.00 down payment and none of these above costs are included for both transactions.
Monthly cost of homeownership is affected by more than just the price to purchase. Homes can both be listed at $400,000, however their taxes, home owner's insurance, HOA fees (or other applicable charges) may not be the same.
Including that expense in the affordability calculation allows for a greater overall monthly housing payment on the one property (which would also have higher ongoing costs), despite the two properties costing the same to buy.
But the down payment isn't the only potential cash demand that occurs when buying a home; there can be cash required for closing costs and for amounts paid up front for future purposes; there could also be demands for moving costs, appraisal fees, home inspection fees, and numerous other items for which payment will be required.
When budgeting for the cheapest price possible, remember not to expect that you can use each penny of existing savings as a down payment. Calculators' affordability doesn't necessarily consider how much money you would prefer to keep in your hands.
When constructing these affordability illustrations, fix the monthly P&I amount, changing only the interest rate to show the mortgage debt that can be sustained at each rate.
| Annual Interest Rate | Monthly P&I Budget | Approximate 30-Year Loan Amount |
|---|---|---|
| 5% | $2,000 | Approximately $372,000 |
| 6% | $2,000 | Approximately $334,000 |
| 7% | $2,000 | Approximately $300,000 |
| 8% | $2,000 | Approximately $272,000 |
These are example calculations using a level P&I budget of $2,000 for 30 years, and are not interest rate forecasts, lender offers, or acceptable loans.
These are key limitations in viewing an estimated affordable home price. The calculator works best for scenarios defined and stated with a explicit set of assumptions.