This calculator helps you estimate how much house you can afford based on your income, debts, and down payment. It's a crucial first step in the home-buying process, allowing you to set a realistic budget and focus your search on properties within your price range.
Understanding Mortgage Affordability
When determining how much house you can afford, lenders typically look at two main debt-to-income ratios:
Front-End Ratio (Housing Ratio): This ratio compares your potential total monthly housing expenses (including principal, interest, property taxes, homeowner's insurance, and sometimes HOA fees) to your gross monthly income. A common guideline is that this ratio should not exceed 28%.
Back-End Ratio (Total Debt Ratio): This ratio compares all of your monthly debt obligations (including the potential mortgage payment, car loans, student loans, credit card minimum payments, etc.) to your gross monthly income. Lenders often prefer this ratio to be below 36%, though some may go as high as 43% or even higher depending on other factors.
This calculator provides an estimate based on common lending guidelines. It considers your income and existing debts to estimate the maximum monthly mortgage payment you might qualify for. From there, it estimates the maximum loan amount you could obtain, and then, factoring in your down payment, the estimated maximum home price you can afford.
Important Considerations:
Property Taxes and Insurance: These can significantly increase your monthly housing costs. Factor in an estimate for these in addition to your principal and interest payment.
PMI (Private Mortgage Insurance): If your down payment is less than 20%, you will likely have to pay PMI, which adds to your monthly cost.
HOA Fees: If the property is part of a Homeowners Association, their fees will also be part of your housing expense.
Closing Costs: Remember to budget for closing costs, which can range from 2% to 5% of the loan amount.
Your Comfort Level: Lenders approve you for a certain amount, but it's crucial to determine what monthly payment you are truly comfortable with.
Use this calculator as a starting point, and consult with a mortgage professional for personalized advice.
function calculateAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value) / 100; // Annual rate
var loanTerm = parseFloat(document.getElementById("loanTerm").value); // In years
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// — Input Validation —
if (isNaN(grossMonthlyIncome) || grossMonthlyIncome <= 0 ||
isNaN(monthlyDebtPayments) || monthlyDebtPayments < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate < 0 ||
isNaN(loanTerm) || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// — Affordability Calculations —
// Assuming common lender guidelines:
// Front-end ratio (housing PITI) <= 28% of gross income
// Back-end ratio (total debt including P&I) <= 36% of gross income
var maxHousingPayment_FrontEnd = grossMonthlyIncome * 0.28;
var maxTotalDebtPayment_BackEnd = grossMonthlyIncome * 0.36;
// The actual maximum P&I payment is limited by whichever is lower:
// 1. The amount remaining after deducting existing debts from the back-end limit.
// 2. The front-end limit itself (as it's the housing portion).
var maxMonthlyPI_Limit1 = maxTotalDebtPayment_BackEnd – monthlyDebtPayments;
var maxMonthlyPI = Math.min(maxHousingPayment_FrontEnd, maxMonthlyPI_Limit1);
// Ensure maxMonthlyPI is not negative
if (maxMonthlyPI 0 && numberOfPayments > 0) {
var numerator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
var denominator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
if (denominator > 0) {
maxLoanAmount = maxMonthlyPI * (denominator / numerator);
}
}
// — Calculate Maximum Affordable Home Price —
var maxHomePrice = maxLoanAmount + downPayment;
// — Display Results —
var formattedMaxHomePrice = maxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxMonthlyPI = maxMonthlyPI.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxHousingPayment_FrontEnd = maxHousingPayment_FrontEnd.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxTotalDebtPayment_BackEnd = maxTotalDebtPayment_BackEnd.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = `
Estimated Affordability:
Estimated Maximum Affordable Home Price: ${formattedMaxHomePrice}
Estimated Maximum Loan Amount: ${formattedMaxLoanAmount}
Estimated Maximum Principal & Interest (P&I) Payment: ${formattedMonthlyPI}
Based on a maximum front-end housing ratio of 28% ($${formattedMaxHousingPayment_FrontEnd}/month) and a maximum back-end total debt ratio of 36% ($${formattedMaxTotalDebtPayment_BackEnd}/month).
Note: This calculation excludes property taxes, homeowner's insurance, PMI, and HOA fees, which will increase your total monthly housing cost. Your actual loan approval may vary.
`;
}
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