About the House Price to Income Ratio Calculator
This house price to income ratio calculator divides a home’s price by your gross annual household income to show how many years of earnings it would cost. The same “median multiple” is used by housing researchers to compare affordability between cities and countries, and lenders look at similar income multiples when deciding how much you can borrow.
Enter the price and your household income before tax to get the ratio and a rating on the Demographia scale: 3.0 or under is affordable, 3.1–4.0 moderately unaffordable, 4.1–5.0 seriously unaffordable, 5.1–8.9 severely unaffordable and 9.0 or more impossibly unaffordable. Because a ratio ignores interest rates, the calculator also estimates the monthly principal and interest on the home and what share of your gross monthly income it would take.
Use it to sanity-check a listing against your pay, compare markets you are thinking of moving to, or set a target price. The Demographia ratings were designed for median prices and median incomes across a whole market, so treat the rating for an individual purchase as a guide rather than a lending decision.
With the default inputs, the price-to-income ratio is 4.42 × income. Change any value above to recalculate instantly.
How to use the house price to income ratio calculator
- 1Enter the home price, or a typical price in the area you are considering.
- 2Enter your total household income before tax.
- 3Read the ratio and the affordability rating.
- 4Add your down payment, rate and term to see the monthly payment’s share of income.
- 5Use the 3× and 5× prices as a target range for your search.
Formula and method
The price-to-income ratio (median multiple) is simply the price divided by yearly household income before tax. Demographia International Housing Affordability rates a median multiple of 3.0 or under as affordable, 3.1 to 4.0 as moderately unaffordable, 4.1 to 5.0 as seriously unaffordable, 5.1 to 8.9 as severely unaffordable and 9.0 or over as impossibly unaffordable; the ratio is rounded to one decimal place before rating.
Because two homes with the same ratio can cost very different amounts each month depending on interest rates, the calculator also works out the monthly principal and interest with M = P × r(1 + r)^n ÷ ((1 + r)^n − 1) on the price minus your down payment, and compares it with gross monthly income (income ÷ 12).
- Ratio
- Years of gross income needed to equal the price
- M
- Monthly principal and interest
- P
- Loan amount (price − down payment)
Worked examples
$420,000 home on a $95,000 income
The ratio is 420,000 ÷ 95,000 = 4.42, which rounds to 4.4 — seriously unaffordable on the Demographia scale. With 20% down at 6.5% over 30 years, principal and interest is about $2,124 a month, roughly 26.8% of gross monthly income.
$250,000 home on an $85,000 income
The home costs 2.94 years of income, which rounds to 2.9 — in the affordable band (3.0 or under). A 3× budget would be $255,000.
$900,000 home on a $100,000 income
At nine times income the home falls into the impossibly unaffordable band. To bring the ratio down to 3× you would need a household income of $300,000.
Frequently asked questions
What is a good house price to income ratio?+
A ratio of 3 or less is generally considered affordable — the home costs no more than three years of gross household income. Ratios above 5 are considered severely unaffordable on the Demographia scale.
How many times my salary can I spend on a house?+
A common rule of thumb is around 3 to 4 times gross household income, but what you can actually afford depends on interest rates, your down payment and other debts. Check the monthly payment share as well as the ratio.
How is the price-to-income ratio different from debt-to-income?+
Price-to-income compares the home price with yearly income. Debt-to-income (DTI) compares your monthly debt payments, including the mortgage, with monthly gross income, and is what lenders use to approve a loan.
Should I use gross or net income?+
Use gross (before-tax) household income. The Demographia median multiple and most lender income multiples are based on gross income, so using take-home pay would overstate the ratio.
Why does the ratio ignore interest rates?+
The ratio is a simple long-run comparison of prices and incomes. Rates change what a given ratio costs each month, which is why the calculator also shows the payment as a percentage of income.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.