1. What is House Affordability?

House affordability refers to the maximum amount you can comfortably spend on housing each month based on your income and existing debt obligations. The standard guideline suggests spending no more than 28% of your gross income on housing expenses.

2. How Does the Calculator Work?

The calculator uses the affordability formula:

Where:

• \( Income \) — Your gross monthly income
• \( Debt \) — Your monthly debt payments
• \( 28\% \) — Recommended maximum housing expense ratio

Explanation: This calculation helps determine how much you can afford to spend on housing (mortgage/rent, taxes, insurance) while maintaining other financial obligations.

3. Importance of Affordability Calculation

Details: Calculating house affordability helps prevent overextension of your finances, ensures you can meet all monthly obligations, and maintains financial stability.

4. Using the Calculator

Tips: Enter your gross monthly income (before taxes) and total monthly debt payments (credit cards, car loans, student loans, etc.). The result shows your recommended maximum housing expense.

5. Frequently Asked Questions (FAQ)

Q1: Why 28% of income?
A: This is the standard recommendation from financial experts to maintain a healthy balance between housing costs and other expenses.

Q2: Should I include utilities in this calculation?
A: The 28% typically includes mortgage/rent, property taxes, and insurance. Utilities are often considered part of the additional 20% recommended for other expenses.

Q3: What if my debt is zero?
A: If you have no debt, your maximum housing expense would simply be 28% of your income.

Q4: Is this calculation before or after taxes?
A: The calculation uses gross income (before taxes), as this is the standard method lenders use for debt-to-income ratios.

Q5: Can I exceed the 28% guideline?
A: While possible, exceeding this guideline may strain your budget and limit your ability to save or handle unexpected expenses.