House Affordability accuracy and testing

Formula source

• This calculator applies the **28/36 Rule**, a standard used by mortgage lenders: 1. **Front-End Ratio (28%)**: Your monthly housing costs (Mortgage + Tax + Insurance) should not exceed 28% of your gross monthly income. 2. **Back-End Ratio (36%)**: Your total monthly debt payments (Housing + Cars + Loans) should not exceed 36% of your gross monthly income. The calculator finds the maximum loan amount that satisfies *both* rules.

Test cases

Known limitations

• This tool provides an estimate. Actual loan approval depends on your credit score, employment history, and current interest rates.

Assumptions

• The estimate uses the 28/36 rule as a conservative lender-style guideline.
• Property tax and insurance are simplified into a monthly estimate instead of location-specific calculations.
• Approval outcomes still depend on credit, reserves, underwriting, and lender program rules.

Unit handling

• Annual Income accepts values in $.
• Monthly Debts accepts values in $.
• Down Payment accepts values in $.
• Interest Rate accepts values in %.
• Loan Term accepts values in Years.
• Taxes & Insurance accepts values in $/mo.
• Max Home Price is displayed as currency.
• Max Housing Payment is displayed as currency.
• Max Loan Amount is displayed as currency.

Rounding rules

• Number displays use up to 2 decimal places in the calculator UI.
• Currency outputs are displayed with standard US dollar formatting.

Version history

Change log