How we calculate

We apply 2026 federal tax brackets based on your filing status, then estimate state taxes using your state. FICA (Social Security 6.2% + Medicare 1.45%) is deducted from gross. The result is your net monthly income — the number that actually matters for affordability.

The Fannie Mae Qualified Mortgage standard is 28% of gross monthly income. We deliberately apply that 28% threshold to net income instead — a more conservative reading that matches how affordability is actually experienced after taxes are paid. A household earning $120k gross in a 25% effective tax bracket has $7,500/mo net. Our 28% threshold gives $2,100/mo of housing capacity; Fannie Mae's gross-based reading would give $2,800/mo. We think the smaller number is the honest one.

Total monthly debt obligations (housing + car payments + student loans + minimum credit card payments + other recurring debt) divided by net monthly income. CFPB Qualified Mortgage rules set 43% of gross as the maximum; we use 36% of net as the comfortable threshold. The 36% boundary is widely used by financial planners as the line between manageable and stretched.

SAFE: housing ratio ≤ 28% of net AND DTI ≤ 36%. STRETCH: housing ratio 28–36% OR DTI 36–43%. RISKY: housing ratio 36–43% OR DTI > 43%. NOT VIABLE: housing ratio > 43% OR negative monthly buffer after baseline lifestyle expenses. Thresholds derive from Fannie Mae, FHA, and CFPB lending standards, applied conservatively against net.

Monthly rent recommendations for your ZIP come from HUD's published Small Area Fair Market Rents (the same numbers HUD uses for Section 8 housing). We carry the 2BR FMR for every ZIP HUD covers. Where HUD's Small Area FMR doesn't cover a ZIP, we fall back to Census ACS median gross rent at the ZCTA level. HUD FMR is intentionally a median-renter figure (typically 10–15% below market in expensive metros), which we view as the right anchor for affordability — what most people in that ZIP actually pay, not what the most expensive listings show.

Buy-scenario home prices are anchored to the US Census American Community Survey 5-Year median owner-occupied home value, by ZCTA. When you start a buy scenario, the form pre-fills with the Census median for your ZIP as a starting point. You can change it; the verdict updates live.

Utilities are state electricity (from EIA Form 861 average monthly residential bills) plus a national-average bundle for gas + water + sewer + residential internet + 2 mobile phone lines. Electricity varies dramatically by state (HI is $202/mo, NM is $84/mo); the other components vary much less, so we hold them at national averages. The combined figure is what a typical 2-bedroom household pays for all utilities.

Non-housing spending categories (food, transport, healthcare, entertainment, etc.) are adjusted by the BEA's Regional Price Parities at the metro level. A user in San Francisco metro sees the same category at 109% of US average; a user in Hanford-Corcoran CA sees 99%. This replaces the old single-state-multiplier approach which over-estimated SF non-housing by ~35%. Metro-level coverage today is the top 42 US metros; outside those, we fall back to state-level RPP.

Per-category spending recommendations (food, transport, healthcare, entertainment, subscriptions, personal care) start from the US Bureau of Labor Statistics Consumer Expenditure Survey 2024, bucketed by income quintile. We then calibrate the figures to a specific persona — urban dual-income professional couple, 28–38, renting, no kids, saving for a first home — because raw BLS quintile averages include retirees, suburban families, and multi-car commuters whose spending shape is fundamentally different. The calibration sources are USDA Moderate Cost Food Plan (food), KFF Employer Health Benefits Survey (healthcare), JCHS Rental Housing report (transport), Lemonade 2026 (renter's insurance), and Perplexity Sonar Deep Research against Federal Reserve SCF microdata.

Unlike spending categories — which show what comparable households actually spend — the SAVINGS line shows what advisors recommend you save. The number is 17.5% of your bracket's average gross income, the midpoint of the 15–20% range broadly recommended by financial planners. This is the only line in the recommendations that is prescriptive: every other line answers 'how much do households like mine spend?', the SAVINGS line answers 'how much should I save?'

Persona calibration is applied to Q3, Q4, and Q5 income brackets ($56k–$220k+), covering the urban-professional life-stage range. Q1 and Q2 still use raw BLS averages because their demographics are structurally different (entry-level wages, single-earner households) and require their own persona work. Geographic data coverage: full-US Census ACS (~33,000 ZCTAs) for home value and median rent; full-US county property tax (~3,200 counties); HUD FMR currently top-50 metros while we finalize bulk-access setup. ZIPs without coverage fall back gracefully to state-level data with a clear citation.