Affordable House Calculator
Introduction to the Affordable House Calculator
The Affordable House Calculator helps you answer the question “How much house can I afford?” It considers your income, taxes, loan payments, and maintenance costs.
The Affordable house calculator answers the question, “How much can I spend for a house?”. It takes into account:
- Annual income and how much you want to spend on housing
- Cash-on-Hand
- Real estate taxes, maintenance, and insurance and estimated loan payments
To use this calculator, you must enter seven inputs:
- Buyer’s annual income: Enter your total gross annual income before taxes and other deductions.
- Cash available: Enter the amount of money you have available for a down payment and closing costs.
- Number of payments: Enter the number of payments you plan to make on your mortgage. For a traditional mortgage, this is typically 30 years (360 monthly payments). Fifteen-year mortgages are also common.
- Annual interest rate: Enter the annual interest rate for your mortgage. This rate is expressed as a percentage.
- Percentage of income to spend: Enter the percentage of your annual income that you want to spend on housing costs. Housing costs include mortgage payments, taxes, insurance, and maintenance.
- Annual taxes & insurance: Enter the estimated annual cost of property taxes and homeowners insurance.
- Annual maintenance costs: Enter the estimated annual cost of maintaining your home, including repairs and upkeep.
Affordable House Calculator
To set your preferred currency and date format, click the “$ : MM/DD/YYYY” link in the lower-right corner of any calculator.
Information
The Results
Once you have entered all your information, the calculator will provide you with the following results:
- Total affordable house price: This is the total amount you can afford to spend on a home, based on your income, expenses, and other factors.
- Annual housing cost: This is the total cost of owning and maintaining your home each year, including mortgage payments, taxes, insurance, and maintenance.
- Mortgage amount financed: This is the amount of money you will need to borrow to purchase your home.
- Monthly mortgage payment: This is the amount you will need to pay each month to make your mortgage payment.
This calculator provides estimates based on the information you enter. Actual costs and payments may differ from these estimates. They may vary because of several factors, including the specific terms of your mortgage and the cost of living in your area. It is recommended that you consult a financial professional before you make any major financial decisions.
Shortcomings of the calculator
- The calculator assumes that all expenses remain constant over time and does not account for any unforeseen increases in costs.
- The calculator does not consider other financial obligations such as debts, student loans, or other monthly expenses.
- The calculator does not factor in changes in interest rates over time (if you select an adjustable rate mortgage).
- The calculator does not consider the possibility of unexpected expenses, such as major repairs or home renovations.
Financial risks of buying a house
- Owning a home involves many expenses that can increase over time, including mortgage payments, property taxes, insurance, and maintenance costs.
- If you cannot keep up with your mortgage payments, you may face foreclosure and the loss of your home.
- The housing market can change, and the value of your home may rise or fall. These changes can affect your ability to sell the home later and can affect your overall financial position.
- In some situations, owning a home can cost more than renting, especially if your mortgage interest rate is high or if unexpected expenses occur.
It is important to evaluate all these factors before deciding to purchase a home.
This calculator, although called the “Affordable House Calculator,” can also help evaluate the affordability of other types of property. Many financial calculators work this way. They can be applied to related calculations with different inputs and goals. If you have questions, post them below, and we will review them.
Affordable House Calculator Help
This calculator answers an important personal finance question— “How much house can I afford?”
Enter your annual income (before taxes) and the cash you have available. Then enter the mortgage interest rate. Next, enter the number of monthly payments you expect to make (360 for a 30 year mortgage, 180 for a 15 year mortgage). Enter the estimated annual taxes and insurance, and the estimated annual maintenance.
For the “Expressed as a percentage of your annual income, how much do you want to spend?” question, this relates to the amount entered for “Buyer’s Annual Income?” If you entered $125,000 for income and you enter 33% for the share of income devoted to housing, then the calculator assumes $41,250 (33% of $125,000) will be the annual amount spent on housing to cover mortgage payments, taxes & insurance, and maintenance.
Note that your “Monthly Mortgage Payment” may be higher because the lender may add taxes and insurance to the amount they collect.
Beth Sobiloff says:
I have a client that needs a calculator so that visitors can determine if they qualify for affordable housing units in the town. Will this work?
Karl says:
Who’s eligible for affordable housing probably varies from jurisdiction to jurisdiction. I’m not sure if you can use this calculator or not. Can you provide more details?
Beth Sobiloff says:
Hi, Karl.
I really don’t have the details yet for this project so I’m trying to provide an estimate “blind”. All I know is that there are income requirements for affordable housing. For instance with a family of 4 you qualify if you earn x amount per household and if you have a family of 6 the amount you can earn is more. I’m not sure if there are other requirements, such as residency. The calculator is just to let the user know whether or not they would even qualify. I don’t think it’s meant to be an application per se.