Home Affordability Calculator

What "afford" actually means

Affordability isn't a single number — it's a judgment with at least three layers. Layer one: what will a lender give you? Typically 4–4.5× gross household income sometimes 5× for strong applicants. Layer two: what can you comfortably afford month-to-month given your other commitments and life? Usually a lower figure than the maximum loan. Layer three: what will you still be able to afford if rates rise or your income drops? Lower still. This calculator helps with the first layer; the commentary below is about the second and third.

The income multiple rule and its limits

Mortgage lenders typically cap at 4.5× gross household income, with some flexibility for strong applicants up to 5×. A couple earning 80,000 combined can therefore borrow roughly 360,000–400,000. Add a 10% deposit and you're looking at 400,000–445,000 of property. That's the lender's view. Whether it's what you might spend is a different question. The multiple rule exists because income predicts repayment capacity reasonably well, but it doesn't account for existing debts, childcare, commute costs, or lifestyle flexibility. Lenders are more conservative now than pre-2008 but less conservative than many individuals' specific situations warrant for any individual's specific situation.

The 28/36 rule

A more personal filter: no more than 28% of gross monthly income should go to housing (mortgage + insurance + local property tax + maintenance), and no more than 36% to total debt payments (housing plus credit cards, car loans, student loans). On 80,000 gross household income (6,667/month gross), that's 1,867/month maximum housing and 2,400/month maximum total debt. These are guardrails, not hard rules. Crossing them doesn't guarantee failure, but staying below them makes bad months absorbable.

The stress test that matters

Regulation requires lenders to stress-test affordability at rates 3 percentage points higher than the current rate. So if your fixed rate is 4.5%, they check whether you could afford the payment at 7.5%. This isn't paranoia — it's the regulator's memory of 2008. You might do your own stress test independently: if your fix resets and the product available then is 3 points higher, can you still cover the payment plus local property tax, insurance, and utilities? If the honest answer is "it would be tight", you're at the upper end of affordability. If the answer is "no", you're above it regardless of what the lender approves.

Deposit size: the most underrated lever

A 10% deposit vs a 20% deposit isn't just a 10% reduction in the loan. It meaningfully changes the rates available. Lenders price in loan-to-value (LTV) tiers: 95% LTV typically carries rates 1–2 percentage points higher than 75% LTV. On a 400,000 property, a 20% deposit (80,000) vs 10% (40,000) saves roughly 200–300 per month in mortgage payments — 72,000–108,000 over a 30-year loan life. Waiting an extra year to build a bigger deposit often saves more than the same year of equity growth would add. This is counter-intuitive and not obvious on first analysis.

The costs that come with the house, not just the mortgage

The mortgage payment is the biggest number, but it's not the only one. On a 400,000 home: local property tax typically 1,500–3,000/year depending on area, buildings insurance 200–500, maintenance at 1% = 4,000/year average (lumpy — boiler, roof, kitchen every few years), service charge if applicable 1,000–3,000, ground rent for leaseholds, and any utility costs that rise with property size. Total non-mortgage annual cost: often 8,000–14,000. That's 650–1,150 monthly added to whatever the mortgage payment is. Affordability math that ignores these is wrong by a meaningful margin.

The transaction costs of moving in

Getting into the property costs real money. Stamp duty (varies by price and first-time buyer status — 0 up to 425,000 for first-time buyers, moving up to 10%+ on portions above 925,000), solicitor fees (1,000–2,000), survey (400–1,500 depending on depth), mortgage arrangement fee (0–2,000), removals (500–2,500), basic furniture and setup (2,000–10,000 depending on how equipped you already are). Total initial cash outlay beyond the deposit: typically 5,000–15,000 for a first-time buyer. Affordability calculations that only consider the deposit understate the cash requirement by this amount.

What you can afford vs what you might buy

Affordability sets a ceiling; it doesn't set a recommendation. The property you "can afford" at the top of your budget leaves no buffer for rate rises, job changes, or life events. Buying at 80–90% of your maximum affordability is often the more resilient choice — the mortgage is more easily absorbable when something goes wrong, and the saved capacity can go to pensions, investments, or just lower stress. Maxing out your borrowing capacity for a specific property is reasonable only if you're confident about income stability and the property is genuinely the right long-term fit. "Stretching" for a house routinely appears in regret surveys of first-time buyers.

The calculator's limits

This tool estimates borrowing capacity from income and deposit. It doesn't run the 28/36 personal budget test, the stress test at +3%, or the ownership cost layer. Use the figure here as the starting point, then apply the other filters before deciding what you can actually afford.