Useful Utilities

Mortgage Affordability Calculator

The largest home price your income can carry: the payment, insurance and taxes at that price never exceed the cash you have spare each month.

Fill in the values and calculate

Annual income*Everything you earn before mortgage costs
Other costs per monthWhat you spend each month besides mortgage costs: repairs, HOA fees, non-housing billsDefault 0
Down payment share of pricePaid up front before the mortgage startsDefault 20
Mortgage term in yearsDefault 30
Mortgage interest rate (%)Default 7
Insurance per $1,000 of value per yearMortgage and property insurance priced on the home's valueDefault 12
Property tax per $1,000 of value per monthTax burden dollars per $1,000 of home value, every monthDefault 5.5

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About Mortgage Affordability Calculator

Affordability is a budget test, not a guess. The cash you have spare each month is income divided by twelve minus your other costs; a home is affordable only if its mortgage payment plus insurance and taxes, which are priced on the home's value, fit inside that cash.

The payment comes from the level-payment formula the mortgage calculator uses, so the maximum price and the payment at it are the same pair a lender would quote for that term and rate. Insurance scales with the whole price, taxes scale with the whole price, and only the loan itself shrinks by the down payment share.

Questions about Mortgage Affordability Calculator

Why does insurance scale with the whole home?

Mortgage and property insurance is priced on rebuilding the home, and taxes are assessed on the parcel: both scale with the whole value, while only the loan shrinks by the down payment.

Should I buy at the maximum?

No. The maximum spends almost all spare cash on mortgage costs; buying below it leaves room for payments on repairs and unexpected bills.

Is the income all of my money?

It should be: anything spent elsewhere belongs in the other-costs field so it does not double count against the mortgage.

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