Home Affordability Calculator

- May 12, 2025
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Calculate how much house you can afford based on your income, debt, deposit, and current mortgage rates.

Income & Expenses

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Deposit & Closing Costs

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Loan Details

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Property Details

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Affordability Settings

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About Home Affordability

Home affordability is determined by several factors including your income, existing debt, credit score, deposit, and current interest rates. Lenders typically use two key ratios to determine how much you can borrow:

Key Financial Ratios
  • Housing Expense Ratio: Your monthly mortgage payment (including principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income.
  • Debt-to-Income Ratio (DTI): Your total monthly debt payments (including your mortgage and all other debts) should not exceed 36% of your gross monthly income.
Deposit Considerations
  • 20% Deposit: The traditional amount, which allows you to avoid Private Mortgage Insurance (PMI).
  • Less than 20% Deposit: You'll typically need to pay PMI, which protects the lender if you default on your loan.
  • Deposit Assistance: Many first-time homebuyers qualify for deposit assistance programmes that can help reduce the upfront cash needed.
Other Homeownership Costs

Remember that your mortgage payment isn't the only cost of homeownership. Also budget for:

  • Home maintenance and repairs (typically 1-3% of home value annually)
  • Utilities (water, electricity, gas, internet, etc.)
  • Potential HOA or condo fees
  • Landscaping and lawn care
  • Furniture and appliances

Understanding the Home Affordability Calculator

The Home Affordability Calculator is a handy tool that helps you figure out how much house you can buy based on your finances. By entering your income, debts, and Other details, it gives you a clear picture of your potential home price. This calculator considers various factors that affect your borrowing ability, assisting you in making informed decisions.

Key Inputs for the Calculation

To get accurate results, you need to provide specific information. The calculator asks for your annual income, monthly debts, down payment, and current mortgage rates. You'll also need to include details about the loan term, property tax rate, and home insurance. Here’s what you’ll enter:

  • Annual Household Income
  • Monthly Debt Payments
  • Down Payment Amount and Percentage
  • Estimated Closing Costs
  • Interest Rate on your Loan

Understanding Your Results

After you enter your information, the Home Affordability Calculator provides you with essential results. This includes the maximum home price you can afford, the maximum loan amount, and your estimated monthly payments. These figures help you understand where you stand in the home-buying process.

Monthly Payment Breakdown

A detailed breakdown of your monthly payment is available if you want to see how each component affects your total costs. This breakdown includes principal and interest, property taxes, home insurance, and any private mortgage insurance (PMI) if applicable. Knowing these details helps you budget effectively.

Advanced Settings for More Accuracy

The calculator also offers advanced options to refine your results. You can adjust the maximum debt-to-income ratio and housing expense ratio, which can give a better reflection of your Financial situation. Additionally, you can choose to include PMI in your calculations for a more realistic scenario if your down payment is under 20%.

Importance of Down Payment

Your down payment plays a significant role in determining your home affordability. A larger down payment can reduce your loan amount and monthly payments, resulting in better mortgage terms. Many first-time buyers benefit from assistance programs that can help with down payments, making homeownership more achievable.

Other Costs of Homeownership

It’s crucial to remember that buying a home comes with more costs beyond the mortgage payment. You should also budget for ongoing expenses such as:

  • Home maintenance and repairs
  • Utilities like water and electricity
  • Homeowners association fees (if applicable)
  • Property taxes

Next Steps in Your Home Buying Journey

Once you have your affordability results, it’s time to take action. Start by getting pre-approved for a mortgage to confirm how much you can borrow. After that, save for your down payment and research areas where you’d like to live. Always consider additional costs of homeownership to ensure you’re financially prepared.