Home Affordability Calculator

This calculator estimates how much you may be able to spend on a home using a simple debt-to-income style model. It starts with your gross monthly income and applies a housing affordability ratio to find the maximum amount you could put toward housing each month.

It then subtracts your monthly debt payments and your property tax and ownership cost estimate to find the repayment you could realistically direct to a mortgage. Using that repayment, your interest rate and your loan term, it reverses the standard mortgage formula to estimate your borrowing power. Finally, your deposit is added to that loan amount to estimate a maximum home price.

A home affordability calculator estimates a possible property price range based on your income and your capacity to make repayments, rather than simply telling you a single fixed number. It helps you understand roughly what price bracket to focus on before you start house hunting or speak to a lender.

By showing a conservative, standard and stretch range, it makes the trade-off between a comfortable budget and a higher purchase price clear, so you can decide how much financial breathing room you want to keep.

Lenders look at far more than income. They assess your debt-to-income ratio to see how much of your income is already committed, and they value a larger deposit because it lowers their risk and the loan-to-value ratio.

They also apply an interest rate buffer, testing whether you could still afford repayments if rates rose by several percent. Your credit history and conduct on existing accounts, along with a detailed review of your living expenses, all feed into the final decision.

Consider a household with the following figures:

• Income: $120,000 per year
• Deposit: $100,000
• Monthly debts: $500
• Interest rate: 6.5%
• Loan term: 30 years

Gross monthly income is about $10,000. Applying the standard 28% housing ratio gives roughly $2,800 a month for housing. After subtracting $500 of debts and an ownership cost estimate, the remaining repayment is fed into the mortgage formula at 6.5% over 30 years to estimate borrowing power. Adding the $100,000 deposit then produces an estimated maximum home price. The exact figures shift with your ownership-cost input and chosen ratio, which is why the calculator shows a range rather than a single number.

• Increase your deposit to raise your maximum price and reduce the loan you need.
• Reduce existing debts so more of your income is available for repayments.
• Improve your credit score to access better rates and smoother approval.
• Compare interest rates between lenders, since small differences have a big impact.
• Consider a cheaper property or different area to keep repayments comfortable.
• Increase your income through extra work, a raise or a second applicant on the loan.