# New & Improved Affordability Calculator

You may recall the javascript-powered affordability calculator I put up here a few years ago. Well, Ross—an intrepid reader and Tableau wizard (and Tableau employee)—decided to take my simple calculator and crank it up a few notches.

Behold the new and improved affordability calculator:

Be sure to note the “Extras” tab, where you can adjust the affordability level to your own personal comfort level, plus add in the monthly cost of mortgage insurance if that applies to your situation.

Spend some time with it and let Ross and I know what you think in the comments. Thanks, Ross!

Methodology:
The typical standard for housing payments to be considered affordable is that they not exceed 30% of a one’s gross income. This calculator determines the total monthly payment on principal, interest, taxes, and insurance (PITI) for a fixed-rate mortgage and compares it to 30% of the given income. Payments equaling 30% or less of income are labeled as affordable. The 30% threshold can be adjusted in the “Extras” tab.

Note that if the down payment is less than 20%, the borrower may also be obligated to pay private mortgage insurance (PMI), which can be included in the above calculation by adding the monthly PMI cost in the “Extras” tab. The federal income tax deduction is not included in the calculation, since this “benefit” is typically not a factor in determining affordability.

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

1. 1
Peter Witting says:

The input requests “income after tax” (income taxes only, I assume), but the methodology states that the affordability threshold is “30% of gross income”. It is really “30% of gross income after income taxes are excluded”? Also, it would be cool to include a feature “other installment debt” to the Extras page, for people who have car loans or student debt eating into their affordability thresholds.

2. 2
Ethan says:

I’ve tried Chrome, Firefox 3, Firefox 4, and Safari under OS X, none actually allow me to input data and see the conclusive values update. Seems less than functional.

Edit: Ah, I was trying to edit the existing values. You have to replace the values wholesale with new numbers.

3. 3
Ross Perez says:

RE: Peter Witting @ 1 – Good point, Peter! I changed the input to “Yearly Gross”, but either way the calculation works the same.

Ethan, sorry you are having trouble with it. It takes a moment to load, so make sure you give it a second. Also, we just restarted our servers so you may want to try back in an hour or so. Lastly, you have to click enter once you have entered your values for it to recalculate.

Excited to see what other ideas you all have…

4. 4
TylerG says:

Nice tool. If the display for interest rate and property tax rate are displayed in percent, then it makes sense to be able to type in “1.5” into the property tax rate field instead of “.015”.

5. 5
Everett_Tom says:

This seems like a good tool, though it took me awhile to get the entry correct. It appears (at least with Firefox under linux?) that you can’t enter number with units (like 1.5%), but you have to enter it as a decimal number 0.015. Also appears not to like the ‘\$’ and ‘,’ in a yearly income (so ‘\$75,000’ didn’t work, but ‘75000’ did.)

6. 6
David S says:

Thanks for offering this product but,,,,,,

The percentage of our annual income calcluation is easier for me to in my head than this calculator is to use.

7. 7
Jon says:

It didn’t work for me… I input all the information and exaggerated the numbers quite a bit… I also think this is an oversimplication of the real issue… if it included cash on hand, likelihood you will lose your job, etc… that would be an awesome tool!

8. 8
3rd Generation says:

You may want to check this one out. It actually works pretty good for me, and a very low (cheap) investment required but Not Free. . . This free one above is useless to my ends.

http://patrick.net/housing/worth.html

You’re Welcome.

9. 9
LA Relo says:

Doesn’t calculate right for me. First interest rate was going to 20%, then it wouldn’t calculate at all.

I guess I’ll stick to the 3:1 ratio.

10. 10
BillE says:

By LA Relo @ 9:

Doesn’t calculate right for me. First interest rate was going to 20%, then it wouldn’t calculate at all.

I guess I’ll stick to the 3:1 ratio.

Same for me. Kept going to 20%. Seems it likes to open with 5.50% but if I wanted to change it to 4.5% it requires it to be input as .045.
Kind of a pain in the rear, just like the other Tableau stuff.

11. 11
David S says:

As it stands, I would call this a miss.

12. 12
David says:

Needs work.

1) You have to replace the entire field when you enter data for the form to update
2) The interest rate needs to be entered like 0.045 for 4.5%

13. 13
The Tim says:

Maybe the interest rate should be changed from a text entry to a slider? It sounds like that would eliminate many of the problems people are encountering.

14. 14

I’d Simplify It

Convert the gross income/mo to net [\$4700/mo- 3800/mo, depending on retirement goals with matching contributions or tax deductable 401Ks and lately, your 2011 portion you pay for employer health insurance, my Blue Cross increase TOTALLY ate up the 2% social security retirement base reduction]….then subtract loan payments. Multiply by 30% for maximum house payment a younger adult family can afford.

15. 15
Jim Hoge says:

Hi Tim – very cool tool! Are you going to convert it into a widget for people to use on external sites?

16. 16

How many buyers will know what the tax “rate” is? Would be easier just to have this as a dollar amount rather than a percentage.

17. 17
Jesse says:

interest rate keeps out-changing to 20%.

18. 18
Jon S says:

Nice calculator, though it’s a bit buggy, at least on Chrome 14 / OSX.

I ran into issues w/ it updating after changing some of the values, tried clearing out the box and entering new values wholesale, hitting enter, hitting the refresh icon, etc. It would get stuck at times and not update until I fully reloaded the page.

19. 19
Ross says:

OK- this has now been changed to a slider. You can click the buttons to move the interest rate by one “click”.

Sorry everyone has had such a bad experience with it, I did not anticipate it would be so hard to use. It is one of those situations where you create something and know it like the back of your hand so the usage does not even come into your mind. Really interesting from a UI perspective though, lots of things to think about for the next visualization.

As an aside, is anyone here actually looking for a home and tried the “Find comparable homes” feature? If you click on the redfin and zillow links at the bottom it will actually search homes within the price you have specified in the given zip code.

ALSO, anyone can embed this or share it by clicking the “Share” button at the bottom left hand corner.

20. 20
Ross says:

RE: Jim Hoge @ 15 – Jim, anyone can just click the “Share” button at the bottom left to embed in any external site. Just a bit of javascript like a YouTube clip!

21. 21
anonymous says:

Since the RMLS lists the tax rate can we just enter in the tax amount?

22. 22
Real World Express says:

You might want to add in a Depreciation/Appreciation field (percent or value). I know when that’s added in, previously “time to buy” homes suddenly became worse then continuing to rent.

23. 23
Jonness says:

Currently, the calculator at housingcorrection.com works better for me because I can enter actual values. It took just a few minutes to code and gives me a fast estimate of monthly expenses when I’m calculating a potential home purchase. If I want to see an amortization schedule, I use the mortgage calculator at bankrate.com or mortgagecalculator.com

http://housingcorrection.com/

http://www.bankrate.com/calculators/mortgages/mortgage-calculator-rates.aspx?zip=98329

IMO, the main problem with your calculator is it’s not intuitive for me to know how to use and doesn’t allow me to pick legitimate values. I would suggest you change your interest rate slider to allow 1/8th point increments and your property tax slider to allow more granular selection. Also, add a calculate button and forget the auto-calculate feature. This will allow users to update existing fields and make the calculator more intuitive for first time users. And finally, add a method that converts multiple input formats so users don’t have to guess how to enter entries into the text fields.

24. 24
BillE says:

By Ross @ 19:

As an aside, is anyone here actually looking for a home and tried the “Find comparable homes” feature? If you click on the redfin and zillow links at the bottom it will actually search homes within the price you have specified in the given zip code.

It doesn’t work with the redfin link.

25. 25
dancingeek says:

You need to make it strip off any leading dollar sign on submit so that if the user changes the default value of the home price by changing one character, i.e. “\$250,000” to “\$350,000”, the form accepts the new value. As it stands, the user has to delete the dollar sign. That is non-intuitive as the accepted value is a different format than the displayed default value.

26. 26
LA Relo says:

Slider seems to make it work. Although, to be anal, rates go down as small as 1/8th increments, but as an estimator of affordability it’s a nice tool.

Should we add an “H2 cash out and lump into my principal” option? Oh wait, this isn’t 2006 anymore.

27. 27

[…] Here is another one from Seattle Bubble…a website dedicated to the Seattle housing market (http://seattlebubble.com/blog/2011/06/23/new-improved-affordability-calculator/).  Lastly, here is a counter argument to the don’t buy argument […]