What the calculators estimate
HowAffordable is a session-only modeling tool. You enter take-home income, debts, living expenses, and a down payment. The app then estimates a loan payment with a standard amortization formula and shows how much cash would be left after that payment plus the bills you listed.
The default home scenario uses a 30-year term and a 5% starting interest rate, and sizes the baseline payment at 25% of monthly take-home income. The default car scenario uses a 60-month term, the same starting rate, and sizes the baseline payment at 10% of monthly take-home income. You can change term, rate, down payment, and loan size on the dashboard. Those defaults are the app’s starting point, not a promise that a lender will offer them.
Loan math
Principal is solved from the payment, rate, and term using the standard present-value formula for a fixed-rate amortizing loan (payment × (1 − (1 + r)⁻ⁿ) / r, where r is the monthly rate and n is the number of payments). If the rate is zero, principal is payment × term. Purchase price is principal plus down payment.
Home scenarios can also estimate property tax (2% of the financed amount per year in the model) and PMI at 1.5% annually when conventional down payment is below 20% of the loan. Those are simplified national placeholders. Actual tax, insurance, HOA, and PMI vary by property and lender.
Report-card grades
After you run a scenario, the report card grades six factors and combines them into one letter. Down payment and emergency fund are weighted more heavily (1.5×) than the other four factors (1×). Grades are a communication device for this tool. They are not a credit score, underwriting result, or recommendation to buy.
- Debt-to-income (DTI). Recurring debts plus the modeled payment, divided by take-home income. An A is at or below 28%; a C is at or below 43%; above 50% is an F. Lenders usually calculate DTI from gross income instead. The CFPB’s DTI explainer is the consumer reference we point to. 43% was also a historical Qualified Mortgage threshold; current QM rules are price-based, and 43% here is only this app’s letter-grade band.
- Payment vs income. Home: 25% of take-home is an A in this app (the same 25% used to size the baseline payment). Car: 10% of take-home is an A. Lenders may use gross income, different percentages, or residual-income tests instead.
- Down payment. 20% or more scores an A+ for a home in this model, matching the common conventional-loan point where private mortgage insurance is often no longer required. See the CFPB’s PMI explainer. FHA, VA, and some conventional products allow much smaller down payments.
- Cash leftover. Take-home minus debts, listed expenses, and the modeled payment. This is the point of the product: a payment can “fit” a ratio and still leave too little month to month.
- Controllable bills. Phone, TV/streaming, internet, and going-out spending as a share of income. This is a HowAffordable lens, not a regulator test.
- Emergency fund. Liquid savings divided by monthly expenses plus debts. Three months scores a B; six months an A+. That follows the widely used 3–6 month reserve range discussed in consumer-finance education, including the CFPB’s emergency-fund guide.
What this is not
The Bureau of Labor Statistics Consumer Expenditure Survey shows that housing, transport, and food dominate typical household budgets — which is why leftover cash after a new payment matters. This site does not use your local BLS market, your credit file, or a lender’s overlays. Rates, taxes, insurance, and qualifying income will differ.
Estimates are for illustration only. 716 Ventures LLC is not a lender, broker, or fiduciary. Read the About page and Terms before relying on any number.