Home Affordability Assessment
Establish a realistic housing purchase range based on income, debts, cash reserves, financing assumptions, and total ownership costs.
What Home Affordability Assessment gets you.
By the end of this upgrade you will have a calculated realistic home purchase price range based on your income, debts, savings, and total ownership costs.
- Gross and net monthly income
- Current monthly debt payments
- Savings available for down payment and closing costs
- Estimated property tax rate and insurance cost for target areas
- Current mortgage rate quotes
Run the upgrade.
- 01
Calculate your debt-to-income ceiling
Determine the maximum total monthly housing payment (principal, interest, taxes, insurance, and any HOA) that keeps your total debt-to-income ratio within a conservative range; verify current lender thresholds since these vary by loan type.
DTI = (all monthly debt payments + proposed housing payment) / gross monthly income
- 02
Confirm cash available for down payment and closing
Total your liquid savings earmarked for the purchase and subtract an emergency reserve you want to keep untouched, plus estimated closing costs.
- 03
Estimate taxes, insurance, and HOA for the target area
Pull actual property tax rates and typical homeowners insurance quotes for the specific area and home price range rather than using national averages.
- 04
Back into a maximum purchase price
Using a current mortgage rate quote, your target loan term, and your maximum principal-and-interest budget, calculate the maximum loan amount, then add your down payment.
Max home price = max loan amount (from P&I budget, rate, term) + down payment
- 05
Add total cost of ownership beyond the mortgage
Add an ongoing maintenance reserve (commonly estimated as a percentage of home value per year) and utility cost differences from your current housing to see true monthly impact.
- 06
Set a purchase price range and non-negotiables
Document a target range (not a single number) along with must-haves versus nice-to-haves to guide the search realistically.
- DTI-based maximum housing payment is calculated
- Available cash for down payment and closing is confirmed net of emergency reserve
- Maximum purchase price is calculated from a real rate quote
- Total cost of ownership (maintenance, utilities, insurance) is included, not just the mortgage
Revisit when
- Mortgage rates move meaningfully before you buy
- Income, debt, or savings change
- You expand the search to a different tax or insurance area
Mortgage qualification rules, rates, and tax figures change — confirm current numbers with a lender before committing.