Question 1

How is the maximum house price calculated?

Accepted Answer

The maximum house price is calculated as 5 years of your monthly net income (60 months). This is a conservative rule of thumb to ensure you can comfortably afford your mortgage payments while maintaining other financial obligations.

Question 2

Why is the maximum monthly payment 25% of my income?

Accepted Answer

The 25% rule is a widely recommended guideline that ensures your mortgage payment doesn't exceed 25% of your monthly net income. This leaves room for other expenses like property taxes, insurance, maintenance, and living costs.

Question 3

How does the mortgage amortization work?

Accepted Answer

The calculator uses standard amortization, which means you make fixed monthly payments over 30 years. Initially, most of your payment goes toward interest, but over time, more goes toward paying down the principal. By the end of 30 years, you'll have paid off the entire loan.

Question 4

What is a realistic house appreciation rate?

Accepted Answer

Historical data shows that house values typically appreciate at 5.5% per year on average, though this varies significantly by location and market conditions. Some areas may see higher appreciation, while others may see lower or even negative appreciation during market downturns.

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