Methodology & Sources
Every formula, default, and data source behind HomeAfford's calculators — documented so you can check our math.
Per-calculator formulas & sources
Mortgage & Affordability
Formula: Standard fixed-rate amortization: M = P · r · (1 + r)^n / ((1 + r)^n − 1), where P is principal, r is the monthly rate, and n is the number of monthly payments. Affordability inverts this against a 28% front-end (housing) and 36% back-end (total debt) DTI rule, then layers in property tax, insurance, PMI (if down payment < 20%), and HOA.
Sources: Freddie Mac PMMS for rate defaults; FHFA for loan limits; Tax Foundation for per-state property tax rates.
Take-Home Pay
Formula: Gross pay → minus pre-tax deductions (401(k), HSA, Section 125 health premiums) → minus Federal income tax (IRS 2026 brackets and standard deduction by filing status) → minus FICA (Social Security 6.2% up to the SSA wage base; Medicare 1.45% on all wages plus 0.9% above the high-income threshold) → minus State income tax (per-state model: progressive, flat, or none).
Sources: IRS 2026 brackets and standard deductions; SSA Contribution & Benefit Base; CMS / IRS Additional Medicare Tax guidance; state Departments of Revenue.
Mortgage Rates
Formula: Default interest rates reference Freddie Mac's Primary Mortgage Market Survey (PMMS) as an industry benchmark. Live tools accept your own rate.
Sources: Freddie Mac PMMS.
Property & Transfer Tax
Formula: Property tax is estimated as effective_rate × home_value / 12 per month, using each state's effective property tax rate. Transfer tax uses each state's published rate schedule (flat, tiered, or county-add-on); first-time-buyer relief is applied where the state grants it (e.g. DC, MD).
Sources: Tax Foundation effective-rate tables; state-published transfer-tax schedules.
Title Insurance & Closing Costs
Formula: Closing costs are itemized into five buckets — lender/origination, third-party (appraisal, inspection, credit), title (lender + owner policy), government (recording + transfer tax), and prepaids/escrow (property tax escrow, homeowners insurance, prepaid interest). Title insurance uses typical promulgated or market-rate levels per state.
Sources: State insurance-department promulgated rates where applicable; typical market figures elsewhere.
Refinance
Formula: New monthly payment computed from new rate, term, and balance using the amortization formula. Break-even months = closing costs ÷ monthly savings. Lifetime cost compares total interest paid on the existing schedule vs. the new schedule including any extension of years — a lower rate over a longer term can still cost more in total interest.
Sources: Same amortization formula and rate benchmarks as the Mortgage tool.
Primary data sources
| Source | Used for |
|---|---|
| Freddie Mac Primary Mortgage Market Survey (PMMS) | Benchmark for weekly 30-year and 15-year fixed mortgage rate defaults |
| IRS Federal Income Tax Brackets (2026) | Federal income tax estimation in the take-home pay calculator |
| Social Security Administration — Contribution & Benefit Base | Social Security wage base cap used in FICA calculations |
| CMS / IRS — Medicare & Additional Medicare Tax | Medicare 1.45% plus 0.9% additional Medicare tax above the high-income threshold |
| State Departments of Revenue / Taxation | Per-state income tax models — flat, progressive, or none (TX, FL, WA, NV, SD, AK, WY, TN, NH) |
| State-published transfer tax & recording-fee tables | Per-state closing-cost transfer / mortgage-recording tax in the closing-cost tool |
| FHFA Conforming Loan Limits | Default conforming caps and jumbo thresholds |
| Tax Foundation — State & Local Property Tax Effective Rates | Default per-state effective property tax rate used in monthly payment estimates |
What these numbers are — and are not
Our outputs are good-faith estimates built from public data and standard industry formulas. They are not a rate lock, an underwriting decision, a tax opinion, or legal advice. Actual lender pricing depends on your credit profile, property type, occupancy, loan program, and lender margin. Always confirm with your lender's Loan Estimate (the federally required 3-page disclosure) before signing anything.