Unfortunately most people just Google one of those home loan calculators or go into a bank branch and ask them how much they can afford to pay and don't look at the biggest assumption that will determine the answer to the original question...the interest rate on the home loan.
The interest rate is the biggest unknown factor when it comes to taking out a loan
In Australia, most loans are variable rate. If you are lucky you may be able to lock in a 5 year fixed interest period but for the majority of your loan you will be paying an unknown rate of interest. Why is this a problem?
The problem is that most 'affordability' calculators assume the prevailing interest rates or they may have a small buffer in there if rates move. In Australia the current rate of interest is ~5% on 30 year mortgages but will it stay like this forever...and will you be able to afford the interest bill if the interest rate moves?
The question we should be asking is: What is a 'normal' home loan interest rate?
The problem with this question is that there is no right answer. Economists will argue until the cows come home what a steady state 'normal' interest rate will be but the fact is that it will all depend on the economic conditions and government policy in the future and there is too much uncertainty around that question.
So how do we deal with the uncertainty associated with unknown future interest rates?
The simple answer is to