Purchase Affordability Check
Calculate whether a major purchase fits your income, savings, debt load, cash flow, and existing obligations before committing.
What Purchase Affordability Check gets you.
By the end of this upgrade you will have a documented affordability decision for a specific major purchase, based on your actual cash flow, savings buffer, and debt load rather than a payment quote alone.
- The purchase price or price range
- Estimated financing terms (rate, term, down payment) if financing
- Current monthly income and fixed expenses
- Current debt balances and monthly minimum payments
- Emergency fund balance
Run the upgrade.
- 01
Calculate the true monthly cost
Add the estimated loan payment (if any) to ongoing costs specific to the purchase, such as insurance, maintenance, fees, or utilities, to get the full monthly cost.
- 02
Calculate your current debt-to-income ratio
Divide total monthly debt payments, including the new purchase payment, by your gross monthly income.
DTI = total monthly debt payments / gross monthly income
- 03
Check the DTI against a conservative threshold
Compare your resulting DTI to a threshold you set as acceptable for your situation and note whether the purchase pushes you above it.
- 04
Confirm the emergency fund stays intact
Verify the purchase, including any down payment, will not reduce your emergency fund below your target number of months of expenses.
- 05
Stress-test monthly cash flow
Subtract the new monthly cost from your current monthly surplus (income minus all expenses) to confirm a positive cushion remains.
- 06
Document the go/no-go decision
Write down the final numbers and your decision, including any conditions (e.g., waiting until debt X is paid off) that would need to change before proceeding.
- True monthly cost of the purchase is calculated, not just the loan payment
- Post-purchase DTI is calculated and compared to a stated threshold
- Emergency fund impact is confirmed acceptable
- A written go/no-go decision exists with supporting numbers
Revisit when
- Income, financing terms, or the purchase price changes materially
- Reuse this check before any future major purchase