House Purchase Affordability Stress Test

The tool iterates through possible home prices and, for each one, computes a stressed monthly mortgage payment (30-year amortization) plus stressed escrow-style costs. It then checks two constraints: (1) the total stressed housing payment must stay within a “monthly discretionary limit” and (2) the remaining income must be large enough to preserve a minimum savings buffer (modeled as emergency fund target divided by 24). The highest home price that passes both constraints becomes your safe maximum, along with a low/high conservative range.

Taxes/insurance/HOA/maintenance aren’t entered individually; they’re approximated as a fixed baseline percent of the home price, then increased by your stress multiplier. It also ignores closing costs, lender fees, PMI thresholds, and rate-lock timing—so the output is a first-pass budget, not a mortgage underwriting decision. The “risk driver” flag is based on which stress factor (rate vs. income vs. costs) most reduces the safe maximum in the tool’s modeled scenario.

Make sure your down payment doesn’t exceed your practical affordability and remember the tool enforces a sanity check that down payment should be no more than 2× your monthly income. If your stress scenario reduces income so much that available income becomes zero or negative, the tool will mark the outcome as not affordable under stress. Finally, if you already have other recurring debts and expenses, this calculator may still look too optimistic because it doesn’t model them explicitly.

With $0 emergency fund after closing, the savings-buffer constraint becomes easier, so the safe max price may rise—though the stress test still limits housing payment to the discretionary limit. If income is entered as 0, the calculator returns “Not affordable under stress.” If the down payment is greater than the trial home price, the loan amount is capped at $0 for that trial—so the “mortgage payment” effectively drops to escrow-only for those iterations.