Mortgage affordability calculator
Pick a method. The ratio method caps housing costs and total debt payments at a share of gross income. The multiple method caps the loan at a multiple of income. Both add your deposit to give a maximum price.
How it works
Lenders decide how much to lend using their own affordability models, credit checks and stress tests. This tool gives a first estimate, not a lending decision.
Ratio method: many US lenders and housing counsellors use rules of thumb such as keeping housing costs near 28% of gross monthly income and all debt payments near 36%. These are your inputs, not legal limits, so change them to match what a lender quotes you.
Income multiple: UK lenders often express maximum borrowing as a multiple of income. Enter the multiple a lender or broker quotes you.
The formula
Ratio method: max payment = min(income/12 × housing%, income/12 × DTI% − other debts) − monthly property costs; max loan = payment × (1 − (1+r)−n) / r. Multiple method: max loan = income × multiple. Either way, max price = max loan + deposit.
Worked example
With $120,000 gross income, $500 of other monthly debt payments, a 28%/36% rule, a 6.5% 30-year rate and a $60,000 deposit: the housing cap is $2,800 and the debt cap is $3,100, so the payment limit is $2,800. That supports a loan of about $442,990 and a price of about $502,990. On the multiple method, £50,000 × 4.5 plus a £25,000 deposit gives a maximum price of £250,000.
Frequently asked questions
Are 28% and 36% official limits?
No. They are common rules of thumb. Lenders set their own criteria, so use the figures a lender gives you.
What income multiple should I use?
Use the multiple a lender or broker quotes for your situation. It varies with income, deposit, credit history and outgoings.
Should I borrow the maximum?
Not necessarily. Leave room for rate rises, repairs and life changes. Run the repayment calculator at a higher rate to test whether the payment would still be manageable.
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General information, not personal financial advice. Results are estimates based on the inputs and assumptions shown.