Estimate how much home you can realistically afford based on your income, debts, and savings.
USD
USD
USD
%
Years
Understanding Your Home Affordability
Buying a home is one of the most significant financial decisions you'll make. This Home Affordability Calculator is designed to give you a realistic estimate of how much you might be able to borrow and, consequently, how much home you can afford. It considers your income, existing financial obligations, savings for upfront costs, and current mortgage interest rates.
The Math Behind the Calculator
This calculator uses common financial guidelines and mortgage calculations to provide an estimate. It focuses on two primary affordability metrics:
Debt-to-Income Ratio (DTI): Lenders typically look at your DTI ratio to assess your ability to manage monthly payments. A common guideline is the "front-end" DTI (housing costs only) and "back-end" DTI (all debts, including housing). This calculator simplifies by considering your total monthly debt payments and estimating potential housing costs. A widely accepted guideline for the total DTI (including mortgage, property taxes, insurance, HOA fees) is often around 36% of your gross monthly income, though this can vary.
Maximum Mortgage Amount: Based on the DTI, available cash for down payment and closing costs, and the mortgage terms (interest rate and loan term), we estimate a potential maximum mortgage amount you could qualify for.
Key Components Explained:
Annual Gross Income: This is your total income before taxes and other deductions. Lenders use this to determine your borrowing capacity.
Total Monthly Debt Payments: This includes all recurring monthly debt obligations such as car loans, student loans, credit card minimum payments, and personal loans. It does NOT include current rent or utilities.
Cash for Down Payment & Closing Costs: This is the liquid cash you have available to cover the down payment (which can range from 3% to 20% or more of the home price) and closing costs (typically 2-5% of the loan amount for appraisals, legal fees, title insurance, etc.). A larger down payment reduces the loan amount needed.
Estimated Mortgage Interest Rate: The annual interest rate you expect to pay on your mortgage. Higher rates mean higher monthly payments for the same loan amount, thus reducing affordability.
Mortgage Loan Term: The number of years you plan to repay the mortgage (commonly 15 or 30 years). A shorter term results in higher monthly payments but less interest paid over time.
How the Calculation Works (Simplified):
Calculate Gross Monthly Income: Annual Gross Income / 12.
Calculate Maximum Allowable Monthly Debt Payment: Gross Monthly Income * 0.36 (using a common 36% DTI guideline).
Calculate Available Monthly Payment for Housing: Maximum Allowable Monthly Debt Payment – Total Monthly Debt Payments. This is the maximum you can allocate towards your mortgage principal, interest, property taxes, and homeowner's insurance.
Estimate Maximum Mortgage Loan Amount: Using a standard mortgage payment formula (M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]), we solve for P (Principal) by inputting the 'Available Monthly Payment for Housing' (adjusted for taxes/insurance, though simplified here), the interest rate per period, and the number of periods. This formula calculates the maximum loan amount you could support with the available monthly payment.
Estimate Maximum Home Purchase Price: Maximum Mortgage Loan Amount + Cash for Down Payment & Closing Costs.
Disclaimer: This calculator provides an *estimate* only. Actual loan approval depends on lender-specific underwriting criteria, credit score, employment history, property appraisal, and other factors. Consult with a mortgage professional for personalized advice.
function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) ||
annualIncome <= 0 || monthlyDebt < 0 || downPayment < 0 || interestRate <= 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Common DTI guideline (back-end ratio)
var dtiLimit = 0.36;
var grossMonthlyIncome = annualIncome / 12;
var maxTotalMonthlyPayment = grossMonthlyIncome * dtiLimit;
var maxHousingPayment = maxTotalMonthlyPayment – monthlyDebt;
if (maxHousingPayment 0) {
var numerator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
var denominator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var mortgageFactor = numerator / denominator;
maxLoanAmount = maxHousingPayment / mortgageFactor;
} else {
// If interest rate is 0, the loan amount is simply the total payment * number of payments
maxLoanAmount = maxHousingPayment * numberOfPayments;
}
// Ensure maxLoanAmount is not negative due to calculation
if (maxLoanAmount < 0) {
maxLoanAmount = 0;
}
// We are simplifying here by assuming the maxHousingPayment directly translates to P&I.
// In reality, property taxes and insurance would also be part of the housing payment, reducing the P&I portion.
// This calculator estimates the *maximum loan amount* you could support if the *entire* available housing payment went to P&I.
// The actual affordability will be lower once taxes and insurance are factored in.
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
// Format results for display
var formattedMaxLoan = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD', minimumFractionDigits: 0, maximumFractionDigits: 0 });
var formattedMaxPrice = estimatedMaxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD', minimumFractionDigits: 0, maximumFractionDigits: 0 });
var formattedMaxHousingPayment = maxHousingPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD', minimumFractionDigits: 0, maximumFractionDigits: 0 });
resultDiv.innerHTML = `
${formattedMaxPrice}
Estimated Maximum Home Purchase Price
(Estimated Max Loan: ${formattedMaxLoan} | Max Monthly Housing P&I: ${formattedMaxHousingPayment})