House affordability calculator
Estimate the home price you can afford from income, debts, deposit and typical lender ratios.
About the house affordability calculator
Estimate the home price you can afford from income, debts, deposit and typical lender ratios.
Part of SmartCalcy’s mortgage & real estate tools. It runs in your browser with no account, uses your own currency and units (change them at the top of the page), and gives estimates for information only, so check official guidance before you rely on a result.
How to use the house affordability calculator
What it calculates and when to use it
This estimates the home price you could afford, working backwards from your income, existing debts, deposit and the share of income lenders typically allow for housing.
How to use it, step by step
- Enter household income before tax and your regular monthly debt payments.
- Add your deposit, expected interest rate and loan term.
- Set property tax, insurance and any monthly service charge.
- Leave the limits at 28% and 36%, or change them to match your lender.
What each input means
- Household income – Gross income per year.
- Monthly debts – Payments on cards, loans and cars, but not rent.
- Deposit – Cash you will put down.
- Property tax and insurance – Yearly costs as a percentage of the price.
- Housing limit – The maximum share of gross income for housing. 28% is the traditional guide.
- All debts limit – The maximum share of income for housing plus all other debts. 36% is traditional.
How to read the results
- Price you could afford – Home price at which the monthly cost reaches the lower of the two limits.
- Monthly housing cost – The budget available, and which limit set it.
- Mortgage, tax and insurance – How that budget is divided.
The formula
Housing budget = the lower of (income ÷ 12 × housing limit) and (income ÷ 12 × all-debts limit − monthly debts). Price = (budget − charges + deposit × f) ÷ (f + t), where f is the mortgage payment per unit borrowed and t is monthly tax and insurance as a share of price.
A worked example
Income of 80,000, debts of 300 a month and a 40,000 deposit at 6.5% over 25 years. The 28% limit gives 1,866.67 a month, below the all-debts limit, so the estimate is about 296,343 with a 256,343 mortgage.
Assumptions and limits
- Lenders also consider credit history, savings, job stability and stress-test your payments at higher rates.
- The 28/36 rule is a guide, and lenders in your country may use income multiples instead.
- Tax and insurance are simple percentages of price.
Common mistakes
- Treating the result as a lending offer.
- Leaving out upkeep, utilities and moving costs.
- Forgetting that a variable rate could raise the payment.
Frequently asked questions
Why is the result lower than my lender’s multiple of income?
Lenders using an income multiple, such as 4.5 times salary, may lend more than the 28% rule suggests. Affordable and available are different things.
Should I use gross or net income?
The 28/36 rule uses gross income. Check the payment also fits your take-home pay.
Related tools
Details
- Monthly housing cost
- £1,866.67limited by the 28% housing limit
- Mortgage payment
- £1,730.84
- Property tax
- £49.39
- Insurance
- £86.43
- Income per month
- £6,666.67