Home Affordability Calculator 🏡
Find out what the bank will say before you ask.
About This Calculator
How It Works
This calculator applies standard mortgage qualification logic to estimate how much home you can afford. It uses your gross annual income, existing monthly debt obligations, and down payment to produce a price range based on two key ratios: GDS (Gross Debt Service ratio — your housing costs should stay below 32% of gross monthly income) and TDS (Total Debt Service ratio — all debts including housing below 44%). Lenders use these same ratios to approve or decline mortgage applications.
The Formula
Max home price = (gross_annual_income × 4.5) - existing_debts. Monthly payment check: PITH <= 32% of gross monthly income (GDS ratio).
When to Use This
Use this before you start seriously shopping — ideally before you even browse listings — to set a realistic price ceiling. Shopping above your actual affordability range is how people end up emotionally attached to homes they can't finance, or worse, stretched into a mortgage that makes every month stressful. This gives you the number that keeps shopping grounded.
Limitations
Affordability varies significantly by lender, credit score, and current interest rate environment — this calculator uses approximations, not a lender's actual underwriting. It also doesn't account for stress test requirements (in Canada, qualifying at 2% above your actual rate), which meaningfully reduce the maximum mortgage you'll qualify for. Get a pre-approval from an actual lender to confirm your real ceiling before making any offers.
Example
$100,000 income, $500/month in debts, 10% down payment — affordable range of roughly $350,000-$420,000. Your mileage will vary. Considerably.
Did You Know?
The standard affordability rule is that your home shouldn't cost more than 3-5x your annual income. In many major cities, the average home costs 10-15x the median income. Math: not always encouraging.
Related Calculators
Knowing What You Can Afford Is Step One — This Is Step Two
A home affordability calculator tells you the maximum you can borrow based on your income and debts. What it can't tell you is whether buying at that maximum is actually a smart financial decision — or whether there's a stronger foundation to build first.
Many first-time buyers stretch to their maximum affordability and then find themselves house-rich and cash-poor: no emergency fund, no investment runway, no flexibility. The smartest home purchases happen when buyers have built genuine financial stability before committing to a 25-30 year mortgage.
Our pick: Set for Life by Scott Trench
Set for Life is a practical roadmap to building real financial stability — specifically designed for people in their 20s and 30s who want to reach financial independence faster than the traditional 40-year plan. Scott Trench (CEO of BiggerPockets) covers how to build savings aggressively, how to think about housing as a financial asset rather than just a place to live, and how to make the numbers work even on a moderate income. 4.6 stars, paperback, under $18. Particularly useful if your affordability calculator told you something that felt either uncomfortably high or frustratingly low.
If you've just run your home affordability numbers and want to make sure your overall financial position is strong enough to back that purchase — this book gives you the framework.
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