Home Affordability Calculator template

With a home affordability calculator you let people see how their income impacts their housing budget. Enter income, down payment, and monthly debts (like student loans, credit card, and car payments) to get a price range to use in their home search.

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What is a Home Affordability Calculator?

A Home Affordability Calculator is more than just a standard mortgage or loan payment calculator. Also known as a Mortgage Affordability Calculator, its main goal is to help people answer the question “How much house can I afford?”

Similar to a regular mortgage calculator, it requires users to input some basic information about a loan, such as:

  • Down payment amount
  • Interest rate
  • Loan term or length of the loan (in years)

But the results that these two types of mortgage loan calculators produce offer different perspectives on the home-buying experience.

A mortgage calculator uses the loan/financial information mentioned above to estimate how much the monthly payment will be depending on how big of a loan (the price of the house minus the down payment) a person is willing to take out.

But home buying is not as simple as saving up for a downpayment and making sure your household income can cover the monthly mortgage payments. You also have to make sure that you're not stretching your budget too thinly so you can still live a relatively comfortable life — and that you’re not setting yourself up for a lifetime of debt or end up being house poor.

You should have money left over after paying off your monthly mortgage and other financial obligations (debt, bills, and household expenses) for unplanned expenses and retirement savings.

A Home Affordability Calculator helps people answer important questions lots of home buyers are thinking about such as:

  • How much mortgage can I afford?
  • How expensive of a house can I afford?

It does this by evaluating a person’s income against all the additional costs involved in home buying and homeownership.

A Home Affordability Calculator will typically require the following financial details from the home buyer:

  • Household income
  • Total debt (car payments, personal loans, credit card debt, student loans, etc.)
  • Property taxes
  • Home insurance
  • HOA fees
  • Closing costs

Once these numbers are plugged into the calculator, it will show you:

  • How big your monthly mortgage payment should be
  • The typical home prices you should be looking at during your house hunting
  • How much mortgage you can get approved for

How Does a Home Affordability Calculator Work?

Home Affordability Calculators use Debt-to-Income (DTI) ratio to determine what a person’s monthly mortgage payment should ideally be. Using this estimated monthly payment, it can then calculate the price of the houses someone should be looking at after factoring in the down payment, interest rates, and the length of the mortgage.

Debt-to-Income ratio simply shows how much of a household’s or an individual’s total monthly income goes to debt payments.

Calculating for DTI is fairly easy. Just add up all the monthly debt payments and divide it by the gross monthly income, then multiply it by 100%.

Debt payments can include but are not limited to:

  • Mortgage payments
  • Credit card bills
  • Car payment
  • Personal loans
  • Student loans

Note that DTI does not take into account other household expenses for food, bills, gas, or any other monthly payments that are not used to pay off outstanding debt.

A common rule of thumb that’s been used for decades is the ‘28%/36% rule’. This states that your mortgage payments shouldn’t be more than 28% of your gross monthly income, and your total DTI ratio should not exceed 36%.

Using the ‘28%/36% rule’ we can quickly estimate the maximum monthly mortgage that would be considered comfortable for most households. We just need to multiply the gross monthly income by 0.36 (which is the equivalent of 36%) and subtract the total monthly debt payments from the resulting figure.

Maximum Monthly Mortgage = (Gross Monthly Income  0.36) - Monthly Debt Payments

One could also just multiply gross monthly income by 0.28 (or 28%) to get an ideal monthly mortgage that will satisfy the ‘28%/36%’ rule.

Ideal Monthly Mortgage = Gross Monthly Income  0.28

However, calculating an affordable or comfortable monthly mortgage payment is only half the story. Figuring out how much house your ideal monthly mortgage can actually buy is a little more complicated.

You can basically use a mortgage calculator in reverse and play with the numbers (down payment, interest rate, and house price) until you arrive at a monthly payment that’s close to what the DTI calculations recommend.

If you want to manually calculate house prices based on your ideal monthly mortgage payment, down payment, mortgage term length, and interest rate, you can use the following equation:


  • i = Periodic Interest Rate (Annual Interest Rate ÷ 12)
  • n = Total Number of Payments (Length of the Loan in Years x 12)

Why Should I Use a Home Affordability Calculator?

A Home Affordability Calculator makes the home buying journey a more straightforward process. Instead of using a basic mortgage calculator and experimenting with different variables to get an approximate estimate of home values or manually calculating house prices using a complicated formula, your website visitors can just input their financial details into a Home Affordability Calculator and be done in a couple of clicks.

The ‘26%/36% rule’ also doesn’t apply to everybody. People with really high household incomes can afford much higher mortgage payments and can get approved for expensive home loans even if their DTI ratio ends up as high as 40% to 45%. The 28% standard also tends to be unrealistic inexpensive real estate markets where the average home prices are much higher.

Using our calculator builder, you can easily customize your own Home Affordability Calculator to serve the needs of your target market. It’s an extremely useful resource that will not only attract more people to your site but also allow you to collect lots of contact info and crucial market data.

Businesses that can benefit from a Home Affordability Calculator include, but are not limited to:

  • Mortgage companies
  • Lenders
  • Real estate brokers
  • Financial advisors

Whether your website directly or indirectly deals with real estate, lending, or financial planning, a Home Affordability Calculator can help educate different types of home buyers and give your brand and your business more visibility.

If this sounds like something you’d like to try out for yourself, you can add a calculator to your website today completely free of charge with no strings attached. You’ll only have to pay our monthly fee once your calculator exceeds 100 monthly visits. Our pricing model is very flexible and you don’t have to pay for services and features that you don’t need.

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