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 helpful tool that helps you figure out how much home you can afford. It takes into account your income, debts, down payment, and current mortgage rates. By using this calculator, you can get a clearer picture of your budget and what kind of home might be right for you.

Input Your Financial Details

When using the calculator, you’ll need to enter some important financial details. For instance, you’ll input your annual household income and any monthly debt payments you have. These numbers help the calculator assess your financial situation accurately, allowing for a more personalised estimate.

Down Payments and Closing Costs Explained

Another key factor in home affordability is your down payment. You can specify the amount you can put down and the percentage of the home price it represents. Additionally, it’s essential to enter estimated closing costs, which can include fees like loan charges and title insurance. Knowing these amounts helps you plan better for your home purchase.

Choosing Loan Terms and Interest Rates

The calculator also allows you to select loan terms and interest rates. You can choose between different fixed-rate options, such as 30-year or 15-year terms. Inputting the current interest rate helps determine your potential monthly payments and how much you’ll pay over time.

Understanding Property Costs

Homeownership comes with various ongoing costs. The calculator asks for details like property tax rates and annual home insurance. You can also factor in any homeowners association fees. These costs can significantly affect your monthly budget, so it’s wise to include them in your calculations.

Advanced Affordability Settings

The calculator offers advanced settings where you can set limits for your debt-to-income and housing expense ratios. These ratios help ensure that you’re not overextending yourself financially. You can also choose to include private mortgage insurance (PMI) if your down payment is less than 20%, giving you a comprehensive view of potential costs.

Reviewing Your Home Affordability Results

Once you’ve entered all the information, the calculator provides detailed results. You’ll see your maximum home price, loan amount, and monthly payments broken down. This information is crucial as it helps you understand what you can realistically afford and helps guide your home search.

Next Steps Towards Home Ownership

  • Get a pre-approval from a mortgage lender to confirm your budget.
  • Start saving for your down payment and closing costs.
  • Research different neighbourhoods that fit within your budget.
  • Consider additional costs such as maintenance and utilities.