Housing Affordability Calculator
A Market-Level Gauge, Not a Personal Budget
Where the Affordability Calculator answers "what can I personally spend?", the Housing Affordability Index answers a different question: is the typical family in a given market earning enough to qualify for the typical home there? It's the calculation economists and housing analysts use to track whether a metro area is becoming more or less accessible over time, built on the same NAR-style methodology used in published affordability indexes.
The Formula
Monthly PITI = Mortgage Payment (P&I) + Monthly Tax + Monthly Insurance
Qualifying Income = (Monthly PITI / Qualifying Ratio) × 12
HAI = (Median Family Income / Qualifying Income) × 100
An index of exactly 100 means the median family has precisely enough income to qualify for a mortgage on the median-priced home under the assumed terms.
Where This Calculation Matters
- Comparing markets — an HAI of 150 versus 90 tells you immediately which of two metro areas is more accessible to its typical resident, independent of the actual price level.
- Tracking a market over time — rising home prices without matching income growth push the index down even if nominal wages are increasing.
- Policy and lending research — analysts and journalists use this index (or close variants of it) to describe housing affordability trends at the national or regional level.
- Sanity-checking your own numbers — if your local market's HAI is well under 100, expect that qualifying for a median-priced home will require above-median income, a larger down payment, or both.
Reading the Index
| HAI value | Meaning |
|---|---|
| Above 100 | Median family has more than enough income to qualify for the median home |
| Exactly 100 | Median family has exactly enough qualifying income |
| Below 100 | Median family falls short of the income needed to qualify |
Worked example: a $75,000 median family income against a $350,000 median home price at 6.5% for 30 years, 20% down, 25% qualifying ratio, $4,200 annual property tax, and $1,400 annual insurance produces a qualifying income of $107,349.94 and an HAI of 69.9 — meaning that family has only about 70% of the income needed to qualify for that home under these terms.
How to Use This Calculator
- Enter the Median Family Income ($/yr) and Median Home Price for the market you're evaluating.
- Adjust Down Payment % if you're not assuming the 20% default.
- Enter the prevailing Interest Rate and Loan Term (years).
- Adjust the Qualifying Ratio % if you want a stricter or looser income-to-payment assumption than the 25% default.
- Optionally enter Annual Property Tax and Annual Insurance for a fuller PITI estimate.
- Select Calculate to see the index value and the qualifying income it implies.
Related Calculations
For your own numbers rather than market medians, use the Affordability Calculator, or compare buying against renting directly with the Rent vs Buy Calculator.