Estimate maximum home price based on your income and debts.
Maximum Home Price
$0
Loan Amount:$0
Monthly Principal & Interest:$0
Est. Monthly Tax & Insurance:$0
Total Monthly Payment:$0
Understanding Your Home Buying Power
Determining "how much house can I afford" is the critical first step in the home buying journey. This Mortgage Affordability Calculator uses standard lender debt-to-income (DTI) ratios to estimate a realistic purchase price range that fits your budget without overextending your finances.
The 28/36 Rule Explained
Most lenders use the 28/36 rule to determine qualification:
Front-End Ratio (28%): Your expected housing expenses (mortgage principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income.
Back-End Ratio (36%): Your total monthly debt obligations (housing expenses plus credit cards, student loans, car payments, etc.) should not exceed 36% of your gross monthly income.
For example, if you earn $85,000 annually (approx. $7,083/month), your maximum housing payment under the front-end ratio would be roughly $1,983. However, if you have high monthly debts (like a $600 car payment), your affordability will decrease based on the back-end ratio constraint.
Key Factors Affecting Affordability
Beyond income, several variables significantly impact your purchasing power:
Interest Rates: Even a 1% increase in interest rates can reduce your buying power by tens of thousands of dollars, as more of your monthly payment goes toward interest rather than principal.
Down Payment: A larger down payment reduces the loan amount required, lowering your monthly payments and potentially avoiding Private Mortgage Insurance (PMI).
Property Taxes: High-tax areas reduce the amount of loan you can afford because taxes are included in the DTI calculation.
Loan Term: A 30-year term offers lower monthly payments than a 15-year term, allowing you to afford a more expensive home, though you will pay more interest over the life of the loan.
Tips for Increasing Your Budget
If the calculated home price is lower than expected, consider paying down high-interest consumer debt before applying. Reducing your monthly debt obligations directly improves your back-end ratio, dollar-for-dollar increasing the amount available for a mortgage payment. Additionally, saving for a larger down payment not only increases your equity immediately but also reduces the lender's risk, potentially qualifying you for better interest rates.
function calculateAffordability() {
// 1. Get Inputs
var annualIncome = document.getElementById('annualIncome').value;
var monthlyDebts = document.getElementById('monthlyDebts').value;
var downPayment = document.getElementById('downPayment').value;
var interestRate = document.getElementById('interestRate').value;
var loanTerm = document.getElementById('loanTerm').value;
var propertyTaxRate = document.getElementById('propertyTaxRate').value;
var homeInsurance = document.getElementById('homeInsurance').value;
var errorDisplay = document.getElementById('errorDisplay');
var resultsArea = document.getElementById('results-area');
// 2. Parse and Validate
var income = parseFloat(annualIncome);
var debts = parseFloat(monthlyDebts);
var down = parseFloat(downPayment);
var rate = parseFloat(interestRate);
var years = parseFloat(loanTerm);
var taxRate = parseFloat(propertyTaxRate);
var insurance = parseFloat(homeInsurance);
if (isNaN(income) || income <= 0) {
errorDisplay.style.display = 'block';
errorDisplay.innerHTML = 'Please enter a valid annual income.';
resultsArea.style.display = 'none';
return;
}
if (isNaN(debts)) debts = 0;
if (isNaN(down)) down = 0;
if (isNaN(rate) || rate < 0) rate = 0;
if (isNaN(years) || years <= 0) years = 30;
if (isNaN(taxRate)) taxRate = 0;
if (isNaN(insurance)) insurance = 0;
errorDisplay.style.display = 'none';
// 3. Logic Implementation
// Calculate Monthly Gross Income
var monthlyIncome = income / 12;
// Front-End Ratio Limit (28% of income for housing)
var maxHousingFront = monthlyIncome * 0.28;
// Back-End Ratio Limit (36% of income for housing + debts)
var maxTotalBack = monthlyIncome * 0.36;
var maxHousingBack = maxTotalBack – debts;
// The allowable monthly housing payment is the lesser of the two
var maxMonthlyPayment = Math.min(maxHousingFront, maxHousingBack);
if (maxMonthlyPayment <= 0) {
errorDisplay.style.display = 'block';
errorDisplay.innerHTML = 'Your monthly debts are too high relative to your income to qualify for a standard mortgage.';
resultsArea.style.display = 'none';
return;
}
// We need to solve for Home Price (P).
// Monthly Payment (M) = PrincipalInterest(Loan) + MonthlyTax + MonthlyInsurance
// Loan (L) = P – DownPayment
// MonthlyTax = (P * (TaxRate/100)) / 12
// MonthlyInsurance = Insurance / 12
// Mortgage Formula Factor for PI:
// r = monthly interest rate
// n = total months
// Factor = (r * (1+r)^n) / ((1+r)^n – 1)
var r = (rate / 100) / 12;
var n = years * 12;
var mortgageFactor = 0;
if (rate === 0) {
mortgageFactor = 1 / n;
} else {
mortgageFactor = (r * Math.pow(1 + r, n)) / (Math.pow(1 + r, n) – 1);
}
// Equation:
// maxMonthlyPayment = ((P – Down) * mortgageFactor) + (P * taxRate/100 / 12) + (insurance / 12)
// maxMonthlyPayment – (insurance/12) + (Down * mortgageFactor) = P * mortgageFactor + P * (taxRate/1200)
// maxMonthlyPayment – (insurance/12) + (Down * mortgageFactor) = P * (mortgageFactor + taxRate/1200)
var taxFactor = (taxRate / 100) / 12;
var monthlyInsurance = insurance / 12;
// Numerator
var numerator = maxMonthlyPayment – monthlyInsurance + (down * mortgageFactor);
// Denominator
var denominator = mortgageFactor + taxFactor;
var maxHomePrice = numerator / denominator;
// Edge case: If maxHomePrice < Down Payment (math quirk), clamping logic needed or just display.
if (maxHomePrice < down) {
maxHomePrice = down; // You can at least afford what you have in cash
}
var loanAmount = maxHomePrice – down;
if (loanAmount < 0) loanAmount = 0;
var monthlyPI = loanAmount * mortgageFactor;
var monthlyTax = maxHomePrice * taxFactor;
var totalMonthly = monthlyPI + monthlyTax + monthlyInsurance;
// 4. Format and Display Results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
maximumFractionDigits: 0
});
document.getElementById('maxHomePrice').innerHTML = formatter.format(maxHomePrice);
document.getElementById('resLoanAmount').innerHTML = formatter.format(loanAmount);
document.getElementById('resPI').innerHTML = formatter.format(monthlyPI);
document.getElementById('resTaxIns').innerHTML = formatter.format(monthlyTax + monthlyInsurance);
document.getElementById('resTotal').innerHTML = formatter.format(totalMonthly);
resultsArea.style.display = 'block';
}