How much can I borrow? Mortgage affordability calculator

Turn your income into a borrowing budget

This mortgage affordability calculator starts from your income and your existing debts. It works out the largest monthly payment a common lending rule allows, the loan amount that payment supports, and the home price you can reach once your down payment and buying costs are taken into account. It also shows the money left each month and how the term and the rate change the answer. Everything runs in your browser.

How to use it

1. Enter each borrower's monthly income, any "Other regular income per month" (rent you receive, for example) and the "Share of other income counted", 70% by default.
2. Add "Existing loan payments per month" (car, student or card payments) and "Other monthly obligations".
3. Pick the "Currency". USD uses the 28/36 debt-to-income rule and asks for "Property tax, home insurance and HOA per month". GBP adds an "Income multiple". EUR uses a single "Maximum debt-to-income ratio".
4. Fill in the "Annual interest rate", the "Term" in years and, if your loan has one, "Loan insurance" as an annual rate on the amount borrowed.
5. Enter your "Down payment" and "Estimated buying costs" as a percentage of the price. "Copy link to this estimate" gives an address that reopens your figures.

How lenders judge what you can afford

In the United States, a common benchmark is the 28/36 rule: housing costs (principal, interest, property tax, home insurance and HOA dues) up to 28% of gross monthly income, and all debt payments together up to 36%. Many lenders and loan programs accept higher ratios, so treat these figures as a starting point. In the UK, lenders mostly cap the loan at a multiple of annual income, often around 4 to 4.5 times, and then run their own affordability checks. In much of Europe, banks look at the share of net income going to loan payments, with 33% to 35% as a usual reference.

Ratios are only part of the picture. Lenders also look at your credit history, the stability of your job, the size of your down payment and the savings left after the purchase.

The formula, with an exact example

For a maximum payment M including insurance, a monthly rate r (annual rate divided by 12), n monthly payments and an insurance rate a charged on the original loan, the amount you can borrow is C = M ÷ (r ÷ (1 − (1 + r)^−n) + a ÷ 12).

US example: two borrowers earn $5,000 and $3,000 a month before tax, pay $300 a month on a car loan and expect $400 a month of property tax, insurance and HOA. The housing limit is 28% × 8,000 − 400 = $1,840; the total debt limit is 36% × 8,000 − 300 − 400 = $2,180. The lower one wins: a maximum payment of $1,840. At 6.5% over 30 years, that supports a loan of $291,107.91. With a $40,000 down payment the budget is $331,107.91, and with buying costs of 3% the affordable home price is 331,107.91 ÷ 1.03 = $321,463.99. After all payments, $5,460 a month is left before tax.

UK example, in GBP: an income of £5,000 a month at a 35% ratio allows £1,750 a month, which at 4.5% over 25 years would support £314,843. But 4.5 times the annual £60,000 caps the loan at £270,000, so the tool keeps that figure and shows its payment, £1,500.75.

Term and rate

The table "How much you can borrow by term and rate" keeps the same payment. For the US example:

A longer term lifts the amount but also the interest: $371,292.09 over 30 years in the example. Half a point of rate moves the 30-year amount by about $15,000.

Buying costs

Closing costs in the US often run at a few percent of the price, while UK buyers may pay stamp duty, legal fees and surveys. Check the real figures for your purchase before you rely on the price shown.

Making your application stronger

• Paying off a small loan frees its monthly payment for the mortgage.
• Regular savings show you can put money aside and add to your down payment.
• A larger down payment means a smaller loan and often a better rate.

FAQ

Should I enter gross or net income?

Use the income your lender uses: gross income for the US 28/36 rule, and usually net income for European ratios.

Why is rental income not counted in full?

Lenders often count around 70% of it to allow for empty months and costs. That is common practice, not a rule, so adjust the share.

Is this a loan approval?

No. It is a rough estimate: every lender applies its own criteria, and this tool gives no personal financial advice.

Should I borrow the maximum?

Not necessarily. Check the money left each month and keep an emergency fund.