House Affordability Calculator
Find the house price you can afford using lender debt-to-income rules.
Please note: Estimates only, not investment or legal advice. Property markets, taxes, fees and lending rules vary by location and change over time. Verify figures with a qualified professional before committing.
What the House Affordability Calculator does
Lenders cap borrowing with two ratios: housing costs against gross income, and all debt payments against gross income. Whichever allows less becomes the binding constraint, and the affordable loan follows by inverting the mortgage payment formula.
Formula
Housing allowance = min(Income × Front-end ratio, Income × Back-end ratio − Existing debts)Available for P&I = Housing allowance − Tax and insuranceMax loan = P&I × ((1 + r)ⁿ − 1) ÷ (r × (1 + r)ⁿ)Max price = Max loan + Down payment
Inputs explained
| Input | Unit | Required | Notes |
|---|---|---|---|
| Gross annual income | selected currency | Yes | Accepts more than 0. |
| Existing monthly debt payments | selected currency | Optional | Car loans, student loans, card minimums. Accepts 0 or more. |
| Down payment available | selected currency | Yes | Accepts 0 or more. |
| Mortgage interest rate | % | Yes | — |
| Loan term | years | Yes | Accepts 1 or more. |
| Housing ratio limit | % | Yes | Maximum housing cost as a share of gross income. |
| Total debt ratio limit | % | Yes | — |
| Annual property tax | selected currency | Optional | Accepts 0 or more. |
| Annual home insurance | selected currency | Optional | Accepts 0 or more. |
| Currency | one of 10 options | Optional | — |
How to use it
- Choose Currency.
- Enter Gross annual income, Down payment available, Mortgage interest rate and Loan term and 2 more.
- Optionally add Existing monthly debt payments, Annual property tax and Annual home insurance.
- Select Calculate.
Worked example
$95,000 income, $450 existing debts, $60,000 down, 6.5% over 30 years, $4,000 tax, $1,400 insurance.
- Income
- 95000
- Debts
- 450
- Down
- 60000
- Rate
- 6.5
- Tax
- 4000
- Insurance
- 1400
Housing budget ₹2,217 (housing ratio binds), less ₹450 escrow leaves ₹1,767 for P&I — a ₹279,506 loan and about ₹339,506 price.
Reading the result
- The "binding constraint" tells you which lever to pull first: if the housing ratio binds, a larger down payment or lower rate raises how much you can borrow; if the total debt ratio binds, clearing existing debt usually moves the number more.
- The "affordability at different interest rates" table shows how sensitive the maximum price is to rate movement between application and closing — check where your rate could land, not just where it is today.
Assumptions and limitations
- The ratio limits themselves (28%/36% by default) are editable inputs, not fixed rules — they approximate common conventional-loan guidelines, but actual limits vary by loan programme and lender.
- Property tax and insurance are entered as flat annual figures for the property you end up buying, which is unknown at this stage — the escrow estimate is only as accurate as that guess.
Common mistakes
- Comparing this result to a different lender's pre-approval as if the two use the same ratio limits — front-end and back-end ratios are editable here precisely because they vary by programme, so a mismatch in assumed limits produces a different maximum price for no real reason.
- Forgetting that a down payment below 20% typically adds mortgage insurance, which is not included in this calculation and reduces the price actually affordable at a comfortable payment.
Frequently asked questions
Should I borrow the maximum I qualify for?
Rarely. Lender limits are set by their risk appetite, not your life. Leaving room for maintenance, savings and income disruption matters more than maximising the purchase.
Why does my existing debt reduce affordability so much?
A $450 monthly car payment consumes $450 of your total debt allowance directly. Clearing a loan before applying can raise your borrowing power substantially.