What is a mortgage stress test?

It models your mortgage against rate rises, income shocks, and higher costs to see if you can keep paying without defaulting.

Which regions are supported?

Presets for UK, US, EU, AU, CA, and IN with region-specific taxes, PMI/LMI, and rate assumptions.

What results do I get?

Default probability, debt-to-income distribution, scenario buckets, and a recommended safe loan amount with monthly payments.

How does the mortgage stress test estimate default risk?

The tool runs thousands of Monte Carlo paths with rate shocks, income drops, and regional costs such as taxes, maintenance, and PMI/LMI. It marks default when monthly cash flow turns negative and reports the share of failing paths as default probability.

Why does the recommended safe loan amount change?

Safe loan sizing responds to your debt-to-income, down payment, recurring costs, and regional stress settings. Higher buffers and lower expenses increase room; tighter DTI caps, higher taxes, or steeper rate buffers reduce it.

Does the calculator include my lender’s exact fees?

No. It uses typical regional costs. Add your lender-specific fees and closing costs into the inputs to get closer to your scenario.

Is the AI insight personalized financial advice?

No. The AI summary rephrases the simulation output and region notes. It is educational only and does not replace advice from a licensed professional.

Will PMI or LMI automatically fall off in the model?

The model includes PMI/LMI where applicable but does not simulate future removal. If you expect it to end, lower the ongoing cost inputs to see the impact.

Mortgage Affordability Stress Tester

Model mortgage risk with shocks and safeguards

Choose a region, enter income, debts, and property details. We run Monte Carlo simulations to show default probability, debt-to-income distribution, and a recommended safe loan level.

Borrower & property

Region presets adjust taxes, PMI/LMI, and rates.

Region

Property price

Down payment

Term (years)

Income

Joint income

Debts (monthly)

Other costs (monthly)

Advanced costs

Property tax (%)

PMI / LMI rate (%)

PMI LTV threshold

Closing costs (%)

HOA (monthly)

Maintenance (% of value / yr)

Apply rental offset (for let/rent scenarios)

Summary

Default probability: —

Recommended safe loan: —

Monthly payment (start): —

Target DTI (mid): —

DTI high (90th): —

AI insight

Run the simulation to enable AI insight.

Charts

DTI distribution

Scenarios

Save runs and compare with AI.

Run a simulation, then add it as a scenario.

Mortgage affordability, explained simply

This stress tester blends your inputs with region presets (taxes, PMI/LMI, typical terms, and rate buffers) to estimate a safe loan and default risk. It is a guide, not advice use it to sense-check decisions and start better conversations with lenders or advisers.

How to use

Pick your region to load local taxes, fees, and mortgage norms.
Enter property price, down payment, income, debts, and running costs.
Run the simulation to see default probability, DTI bands, and a recommended safe loan.
Generate AI insight to get a plain-language summary and tips.

What the tool considers

Rate shocks, income drops, and vacancy/maintenance assumptions by region.
PMI/LMI, property tax, closing costs, HOA, and upkeep defaults you can tweak.
Stress interest add-ons and max DTI thresholds from the region presets.
Monte Carlo simulation across thousands of paths to flag risky scenarios.

Good to remember

Results change with your inputs and the presets review both.
Consider extra buffers for emergencies, rate resets, and income gaps.
Policies, taxes, and lender rules vary; confirm details with local pros.
This is educational only, not personalized financial advice.

How we calculate default probability

We run thousands of Monte Carlo paths that nudge rates up and down, apply income shocks, and layer regional costs like property taxes, maintenance, and PMI/LMI. For each path, we track monthly cash flow and flag when the mortgage becomes unsustainable. The default probability is the share of paths that go bad.

Why the safe loan amount changes

Safe loan sizing depends on your debt-to-income, the region’s stress add-on, and how much cushion you have after taxes, HOA, and upkeep. Higher incomes, larger down payments, and lower recurring costs give more room; higher rate caps, tighter DTI limits, or steep taxes pull the number down.

The theory behind the calculation

At its core, the model blends two ideas: payment math and shock testing. Monthly mortgage payments follow the standard amortization formula, P = L × r / (1 - (1 + r)^-n), where L is the loan, r is the monthly rate, and n is the number of payments. We then perturb r with a stress add-on and rate volatility, adjust income with shocks, and incorporate taxes, PMI/LMI, maintenance, and HOA as additional outflows. Debt-to-income (DTI) is tracked each step as DTI = (debts + housing) / income. A path is marked risky if cash flow turns negative or DTI exceeds the region’s max threshold; the default probability is the fraction of paths that cross those lines.

Quick answers

Does this include my exact lender fees? No defaults use typical regional costs. Add your lender’s fees into the inputs (closing costs, HOA, maintenance) for a closer match.

Will PMI/LMI drop off? The model includes PMI/LMI where applicable, but it does not simulate future removal. If you expect PMI/LMI to end, lower the ongoing cost inputs to see the impact.

Why is my DTI high but default risk low? Some scenarios have stable income and rate paths that keep payments manageable. Still, a high DTI leaves less buffer; consider increasing down payment or extending the term.

Is the AI text personalized advice? No. The AI summary rewrites the simulation output and your region notes; it is informational only.

Disclaimer: This calculator is for educational purposes only and does not provide financial advice.