Mortgage affordability calculator
Estimate the maximum loan you could afford based on your income, expenses, and debt-to-income comfort level — a planning tool, not a lending decision.
Calculator mortgageLogic updated April 2026
This calculator estimates the maximum mortgage you can afford based on your gross income, existing monthly expenses, the interest rate you expect to be offered, and a debt-to-income (DTI) cap that reflects how much of your income you're comfortable directing to repayments. It's a planning tool — not a pre-approval — but it tells you the order of magnitude before you talk to a lender.
How this is calculated
Formula
maxLoan = affordablePayment × (1 - (1+r)^-n) / rStep-by-step
- Convert annual income to monthly income (annualGrossIncome ÷ 12)
- Apply the DTI cap to monthly income to get the maximum total housing-related outflow
- Subtract existing monthly expenses to get the affordable monthly mortgage payment
- Convert the annual interest rate to a monthly rate (rate ÷ 12 ÷ 100)
- Apply the reverse-annuity formula above to back-solve the maximum loan that the affordable payment can service over the term
- Add your deposit to estimate the maximum property price you can target
- Rounding mode
- ROUND_HALF_UP
- Precision
- 20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
- Logic last reviewed
Assumptions & limitations
What this calculator assumes
- Affordability is estimated from gross income and a self-reported DTI cap
- Interest rate is held constant for the loan term
- Existing monthly expenses are subtracted from monthly income before calculating mortgage capacity
- Result is a planning estimate — not a pre-approval or lending decision
- Deposit is treated as funds available at settlement, not financed
What this calculator doesn’t account for
- Does not model lender-specific assessment criteria (HEM benchmarks, serviceability buffers, scaled income tests)
- Does not include transfer duties, government charges, or settlement costs
- Does not account for lenders mortgage insurance on high loan-to-value ratios
- Does not stress-test affordability against rate increases
- Treats expenses as a flat monthly figure — not a variable household budget
Worked example
A household with $120,000 gross annual income, $2,500 of monthly expenses, a $80,000 deposit, targeting a 30-year loan at 6.5%, with a 35% DTI cap.
| Input | Value |
|---|---|
| Annual gross income | $120,000 |
| Monthly expenses | $2,500 |
| Deposit | $80,000 |
| Interest rate | 6.5% |
| Loan term | 30 years |
| Max DTI | 35% |
Estimated maximum loan: ~$158,000 — Maximum property price: ~$238,000
Monthly income is $10,000. The 35% DTI cap allows $3,500 of monthly outflow toward housing. Subtracting $2,500 of existing expenses leaves $1,000 of capacity for the mortgage payment. At 6.5% over 30 years, $1,000 a month services a loan of roughly $158,000. Adding the $80,000 deposit yields the maximum price.
Frequently asked questions
What is a debt-to-income ratio?
A debt-to-income (DTI) ratio is the share of your gross monthly income that goes to debt repayments. Lenders use it as a serviceability check. As a self-imposed cap in this calculator, it's the maximum proportion of income you're willing to commit to housing — common ranges are 28–36%, with anything above 40% typically considered stretched.
How much deposit do I need?
The deposit is treated as cash you bring to settlement on top of the loan. Larger deposits reduce the loan you need, lower your monthly repayment, and may help you avoid high loan-to-value insurance. This calculator doesn't recommend a target deposit — it shows how the deposit you have lifts your maximum property price.
What expenses do lenders consider?
Lenders typically count credit card limits, existing loan repayments, dependants, transport, insurance, and a benchmark cost-of-living estimate. This calculator simplifies that to a single monthly expenses figure — enter a realistic total of your committed outgoings, not just discretionary spending, for the result to be meaningful.
Does this include stamp duty or transfer fees?
No. Government charges (stamp duty, transfer duty, registration fees) and lender fees (establishment, valuation) are excluded. Use the property purchase tax calculator alongside this one to understand the total upfront cost — those fees usually have to come out of your deposit, reducing what you can put toward the property itself.
Why is this only a planning estimate?
Lenders apply their own serviceability buffers (often a 2–3 percentage-point uplift on the assessment rate), benchmark expense floors, and credit checks that this calculator can't replicate. Use the result as an upper bound to size your search, then get a pre-approval from a lender for an authoritative number.
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