Home Affordability Calculator
Using the 28/36 rule with your annual income and existing debts, estimate the affordable monthly payment, maximum loan and maximum home price.
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Results
At a glance:Home affordability works backwards from your income and existing debts to the 'maximum affordable monthly payment, maximum mortgage loan and maximum home price'. The international 28/36 rule: monthly housing expense should not exceed 28% of gross monthly income (front-end ratio), and total debt service should not exceed 36% (back-end ratio). Take the stricter as the affordable payment, then invert with the annuity-present-value formula: maximum loan = monthly payment × [1 − (1 + r)^−n] ÷ r, and maximum home price = maximum loan ÷ (1 − down-payment ratio). In Hong Kong banks must also apply the HKMA debt-servicing-ratio (DSR) cap and approve accordingly; the actual amount follows the bank's assessment.
Formula
Front-end cap = gross monthly income × 28%.
Back-end cap = gross monthly income × 36% − other monthly debts.
Affordable monthly payment = min(front-end cap, back-end cap).
Max loan = monthly payment × (1 − (1 + r)^−n) ÷ r; max home price = max loan ÷ (1 − down-payment ratio).
$$\text{MaxPayment} = \min(0.28 \times \text{GrossMonthly},\ 0.36 \times \text{GrossMonthly} - \text{Debts})$$$$\text{MaxLoan} = \text{MaxPayment} \times \dfrac{1 - (1+r)^{-n}}{r}, \quad r = \dfrac{\text{annualRate}}{12}, \quad n = \text{years} \times 12$$$$\text{MaxHomePrice} = \dfrac{\text{MaxLoan}}{1 - \text{DownPaymentRatio}}$$How to Use
- Enter annual gross income and other monthly debt repayments.
- Set the planned down-payment ratio, mortgage rate and term.
- View the affordable monthly payment, maximum loan and maximum home price.
FAQ
Does the 28/36 rule apply in Hong Kong?
The 28/36 rule is an internationally common personal-finance rule of thumb and is useful for a quick self-assessment. Hong Kong banks instead approve mortgages under HKMA guidelines using a debt-servicing-ratio (DSR) cap and an interest-rate stress test, whose criteria and calculation differ from 28/36. The actual approved amount follows the bank's assessment.
How does the stress test affect my affordable amount?
The HKMA requires banks to assume an interest-rate rise (usually +2%) and still keep the debt-servicing ratio within the cap. This means the approved loan is often lower than what a low-rate calculation suggests, so it is wise to leave a buffer in your homebuying budget.
Is a higher down payment always better?
A higher down payment means a smaller mortgage, lower monthly payments and less interest, but it also ties up more cash and reduces liquidity. You should balance the repayment burden against your cash reserve and investment opportunities.
What is the maximum mortgage LTV in Hong Kong, and how does it affect affordability?
Under current HKMA measures, a standard self-used residential property priced at HK$30 million or below can have up to 70% LTV (a 30% down payment); a higher LTV requires the Mortgage Insurance Programme. A lower down-payment ratio (e.g. 30%) lets the same affordable loan translate into a higher home price, but the DSR must still be met and a higher LTV adds mortgage-insurance cost.
How does this calculator differ from the bank's actual approval?
This calculator uses the international 28/36 rule for a quick estimate and does not include the stress test, mortgage insurance, the actual DSR cap or individual bank policies. Hong Kong banks follow HKMA guidelines and test the repayment ratio under a rate-rise scenario, so the actual approved amount is usually lower than this estimate. Results are for planning reference only.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.