Housing Affordability Calculator
Estimate the maximum home price you can afford based on your income, debt, interest rate, and loan term.
※ Use if necessary
Housing Affordability Calculator
Calculate the maximum home price you can afford based on your financial situation, including income, debts, and loan terms.
These results are for reference only and were developed for educational and testing purposes. You can also directly access and review the source code, including the logic and free APIs used on this page.
Calculation Results
Monthly Repayment Schedule
| Month | Payment | Principal | Interest | Balance |
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Housing Affordability Calculator Guide
The Housing Affordability Calculator estimates the maximum home price you can afford based on your income, debts, down payment, interest rate, and loan term. This guide provides instructions for using the tool and objective information about housing affordability factors.
How to Use the Housing Affordability Calculator
Follow these steps to estimate your housing affordability:
- Enter Annual Income: Input your total yearly gross income.
- Enter Monthly Debt Payments: Provide the total of your monthly debt obligations (e.g., car loans, credit cards).
- Enter Down Payment: Specify the amount you can pay upfront.
- Set Annual Interest Rate: Input the yearly interest rate for the mortgage.
- Specify Loan Term: Enter the mortgage duration in years.
- Set Max Debt-to-Income Ratio: Enter the maximum DTI percentage (e.g., 36% or 43%).
- Calculate: Click "Calculate Affordability" to view the results.
Understanding Housing Affordability
Housing affordability is determined by several financial factors:
Debt-to-Income Ratio (DTI)
The percentage of your monthly income that goes toward debt payments, including the mortgage.
- Formula: DTI = (Total Monthly Debt Payments + Mortgage Payment) / Monthly Income
- Typical lender thresholds: 36% (conventional loans), 43% (FHA loans)
Loan-to-Value Ratio (LTV)
The ratio of the loan amount to the home price.
- Formula: LTV = Loan Amount / Home Price
- Higher down payments reduce LTV and may lower interest rates.
Mortgage Payment Calculation
The monthly payment is calculated using the standard amortization formula:
- Formula: P = [r * PV] / [1 - (1 + r)^(-n)]
- P = monthly payment, r = monthly interest rate, PV = loan amount, n = number of payments
Factors Affecting Affordability
Key elements that influence the home price you can afford:
Income
Your gross annual income sets the foundation for affordability calculations.
- Higher income increases borrowing capacity.
- Lenders typically allow 28%-36% of income for housing costs.
Debt Obligations
Existing debts reduce the amount available for mortgage payments.
- Higher debts lower affordability.
- Included in DTI calculations.
Down Payment
The initial payment affects the loan amount and interest costs.
- Typical range: 3%-20% of home price.
- Larger down payments reduce monthly payments.
Interest Rate and Loan Term
These determine the cost of borrowing.
- Higher rates or shorter terms increase monthly payments.
- Longer terms reduce monthly payments but increase total interest.
Typical Mortgage Rates and Terms
Rates and terms vary based on economic conditions (as of general trends):
Fixed-Rate Mortgages
- 30-year: 3%-6%
- 15-year: 2.5%-5%
Variable-Rate Mortgages
- Initial rates: 2.5%-5%
Additional Resources
For more information, refer to these authoritative sources:
- Federal Housing Administration (FHA): Guidelines on loan eligibility and DTI limits.
- Consumer Financial Protection Bureau (CFPB): Information on mortgage types and affordability.
- U.S. Department of Housing and Urban Development (HUD): Housing cost and loan data.