1. What is the House Affordability Calculator?

The House Affordability Calculator estimates the maximum home price you can afford based on your income, debts, and a standard affordability multiplier. It follows Google's approach to calculating home affordability.

2. How Does the Calculator Work?

The calculator uses the affordability formula:

Where:

• \( Annual\ Income \) — Your monthly income multiplied by 12
• \( Multiplier \) — Typically between 2.5-5 (3.5 is standard)
• \( Debts \) — Your total outstanding debts

Explanation: The multiplier represents how many times your annual income lenders might approve for a mortgage, minus any existing debts.

3. Importance of Affordability Calculation

Details: Calculating home affordability helps prevent overborrowing, ensures comfortable mortgage payments, and gives realistic expectations when house hunting.

4. Using the Calculator

Tips: Enter your monthly take-home income, select an appropriate multiplier (3.5 is conservative), and include all outstanding debts for an accurate estimate.

5. Frequently Asked Questions (FAQ)

Q1: What multiplier should I use?
A: 3.5 is conservative, 4-4.5 is average, and 5 is aggressive. Higher multipliers mean higher risk of being house-poor.

Q2: Should I include taxes and insurance?
A: This calculator gives a price estimate. You should separately budget 1-3% of home value annually for taxes/insurance.

Q3: How accurate is this calculator?
A: It provides a general estimate. Actual approval amounts depend on credit score, interest rates, and lender policies.

Q4: What debts should I include?
A: Include all recurring debts: car payments, student loans, credit card minimums, and other loan obligations.

Q5: Does this account for down payment?
A: No, this calculates total home price. Your actual loan amount would be home price minus your down payment.