How this calculation works
The smaller of your housing ratio and your total debt ratio determines the monthly amount available. The calculator solves for price while allowing property tax to rise with price and the down payment to reduce the loan amount.
Housing budget = min(income × housing share, income × total debt share − other debt). Solve loan payment + property tax + fixed housing costs = budget.A worked example
With 10,000 monthly gross income, 1,000 of existing debt and the 30% and 40% limits, the housing budget is 3,000. A 50,000 down payment, 6% loan, 1.2% property tax and 200 of other monthly costs give a modeled price near 443,110.
Good to know
Use one currency throughout. The scenario excludes closing costs, mortgage insurance, utilities, maintenance and lender eligibility rules.
How the inputs affect the result
Choose a budget after allowing for irregular costs such as repairs and insurance changes. An increase in tax rate consumes part of the same monthly budget even if the mortgage interest rate stays fixed.
A higher recurring tax lowers the price supported by the same monthly budget.
Where the calculation applies
Use one currency throughout. The scenario excludes closing costs, mortgage insurance, utilities, maintenance and lender eligibility rules.
For a related calculation, see the Loan payment budget calculator.
A few questions, answered
Why can a larger down payment raise the price ceiling by less than the cash added?
A higher purchase price increases modeled property tax. The loan shrinks with the down payment, while property tax still depends on the full price.
What does the “Higher property tax” setting illustrate?
A higher recurring tax lowers the price supported by the same monthly budget.