To determine what size air compressor you need is simple. What kind of projects will you be using it for? If you will be using your air compressor for light to moderate-duty projects around the house, such as airbrushing, reupholstering, and inflating tires, a smaller compressor that is easy to carry around the house or garage would suit you best.
For tackling heavier duty home and auto projects, such as woodworking (sanders can be air-hogs), or car repair, you can still use a residential-sized compressor, just choose one on the larger end of the spectrum.
For extreme duty, like in a professional shop where you will need the compressor to run on a frequent basis and perhaps power several tools at once, a commercial-grade compressor with higher output will be necessary to power your jobs.
To figure the exact size you will need, simply check the tools that you will be using with you air compressor. If you will only be using one tool at a time, find the tool you will use that requires the largest CFM. This will be the CFM you use to determine what size air compressor you need. If you will be using more than one tool at a time, add up the CFM for all the tools that will be used at the same time and use this total to determine the size of the compressor you need.
You need an air compressor that exceeds the CFM of your most powerful tool (but not by much, so don’t get carried away because this will waste energy). So, once you have figured out your minimum required CFM, multiply that number by about 1.5 to keep from overworking your compressor.
Now you can choose an air compressor. Pick one that meets your CFM requirements, and also double check that it has the required PSI to operate your specific tools.