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Finance & business

Mortgage affordability calculator

Model mortgage affordability with maximum monthly payment, loan amount, purchase budget, interest cost and rate scenarios.

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This choice applies to every calculator; amounts are not converted.

Your borrowing capacity

Change your income, debts and loan assumptions to update the affordability estimate instantly.

Maximum purchase budget-
Maximum loan amount-
Maximum mortgage payment-
Estimated total interest-
Monthly income left after commitments-

Monthly budget breakdown

-Maximum debt ratio
New mortgage-
Existing debts-
Other housing costs-
Income left-

Rate and term sensitivity

RateTermPaymentBorrowing capacityPurchase budget

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How does this tool work?

This calculator estimates an affordable home budget from monthly income, existing debts, down payment, interest rate, term and an adjustable debt-ratio ceiling. It is a planning estimate rather than a loan approval.

The monthly debt ceiling is calculated by applying your selected debt ratio to household income.

Existing debts and recurring housing costs are deducted to determine the payment available for a new mortgage.

The loan amount is derived from that payment, the annual interest rate and the term using a fixed-payment amortization formula.

The down payment is added to the loan amount and the sensitivity table shows the effect of different rates and terms.

How to use this tool

  1. Enter household income

    Use a consistent monthly income basis.

  2. Add existing commitments

    Include current debt payments and recurring housing costs.

  3. Set financing assumptions

    Enter down payment, interest rate, term and target debt ratio.

  4. Compare scenarios

    Review purchase budget, loan amount, payment and sensitivity results.

Mortgage affordability formulas

The maximum payment comes from the debt ratio; the loan amount is then derived from the formula of a fully amortising loan with fixed monthly payments.

Maximum mortgage payment

Maximum mortgage payment = Monthly household income × Maximum debt ratio ÷ 100 − Existing monthly debt payments − Other monthly housing costs

Set to zero when existing commitments already exceed the ceiling.

Maximum loan amount

Maximum loan amount = Maximum mortgage payment × (1 − (1 + t)^(−n)) ÷ t

t is the monthly rate (annual rate ÷ 12 ÷ 100) and n the number of payments (term in years × 12).

Maximum purchase budget

Maximum purchase budget = Maximum loan amount + Available down payment

Closing costs must be paid out of this budget.

R
Monthly household income
d
Maximum debt ratio (%)
D
Existing monthly debt payments
H
Other monthly housing costs
M
Maximum mortgage payment
t
Monthly interest rate
n
Number of monthly payments
K
Maximum loan amount
A
Available down payment

Mortgage insurance is not included in the calculated payment; add it to other monthly housing costs to take it into account.

Use cases

Plan a home purchase

Estimate a search budget before viewing properties or meeting a broker.

Compare loan terms

See how term length affects borrowing capacity and total interest.

Stress-test interest rates

Measure how a higher or lower rate changes the amount you can borrow.

Examples

Borrowing capacity of a household earning €5,000 a month

35% of €5,000 = €1,750 of total payments, minus €300 of existing debt: a €1,450 payment, i.e. €289,638.78 over 25 years at 3.5%, plus the down payment.

Input

Monthly household income: €5,000; Existing monthly debt payments: €300; Available down payment: €30,000; Annual interest rate: 3.5%; Loan term: 25 years; Maximum debt ratio: 35%

Result

Maximum mortgage payment: €1,450; Maximum loan amount: €289,638.78; Maximum purchase budget: €319,638.78; Estimated total interest: €145,361.22

Tips and best practices

  • Test a slightly higher rate to keep a safety margin.
  • Maximum borrowing capacity is not always a comfortable budget; preserve enough residual income.
  • If the down payment must also cover closing costs or renovation, do not add all of it to the property price.

Sources and references

Frequently asked questions

Is this a mortgage approval?

No. A lender may use different income, expense, insurance and underwriting rules.

Why are existing debts deducted?

They already consume part of the monthly repayment capacity.

Does a larger down payment increase the maximum payment?

No. It increases the purchase budget while the payment ceiling still comes from income and debt assumptions.

What belongs in other housing costs?

Insurance, recurring property charges, monthly taxes or other housing costs you want to reserve.

Why does the down payment raise the budget but not the loan amount?

The maximum loan depends only on the affordable payment, the rate and the term. The down payment is then added to the loan to give the purchase budget. In practice, a larger down payment can still help you obtain a better rate from the lender.

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