function calculateAffordability() {
var income = parseFloat(document.getElementById("macAnnualIncome").value);
var debts = parseFloat(document.getElementById("macMonthlyDebts").value);
var downPayment = parseFloat(document.getElementById("macDownPayment").value);
var rate = parseFloat(document.getElementById("macInterestRate").value);
var years = parseFloat(document.getElementById("macLoanTerm").value);
var taxRate = parseFloat(document.getElementById("macPropertyTax").value);
var insuranceYearly = parseFloat(document.getElementById("macInsurance").value);
var hoa = parseFloat(document.getElementById("macHOA").value);
var errorDiv = document.getElementById("macErrorMessage");
var resultDiv = document.getElementById("macResults");
errorDiv.innerHTML = "";
resultDiv.style.display = "none";
// Input Validation
if (isNaN(income) || income <= 0) {
errorDiv.innerHTML = "Please enter a valid annual income.";
return;
}
if (isNaN(debts) || debts < 0) debts = 0;
if (isNaN(downPayment) || downPayment < 0) downPayment = 0;
if (isNaN(rate) || rate <= 0) {
errorDiv.innerHTML = "Please enter a valid interest rate.";
return;
}
if (isNaN(taxRate) || taxRate < 0) taxRate = 0;
if (isNaN(insuranceYearly) || insuranceYearly < 0) insuranceYearly = 0;
if (isNaN(hoa) || hoa < 0) hoa = 0;
// Standard Banking Ratios
// 28% of monthly income for housing costs (Front-end)
// 36% of monthly income for total debts (Back-end)
var monthlyIncome = income / 12;
var maxFrontEnd = monthlyIncome * 0.28;
var maxBackEnd = (monthlyIncome * 0.36) – debts;
// The maximum allowable monthly housing payment is the lesser of the two
var maxMonthlyHousingPayment = Math.min(maxFrontEnd, maxBackEnd);
if (maxMonthlyHousingPayment <= hoa + (insuranceYearly / 12)) {
errorDiv.innerHTML = "Based on the provided debts and income, it appears you cannot afford a mortgage payment at this time.";
return;
}
// Logic to reverse engineer the Home Price
// MaxPayment = PrincipalAndInterest + MonthlyTax + MonthlyInsurance + HOA
// var P = Loan Amount
// MonthlyTax = (P + DownPayment) * (TaxRate/100 / 12)
// MonthlyInsurance = InsuranceYearly / 12
// HOA = HOA
// PI = P * (r * (1+r)^n) / ((1+r)^n – 1)
// P * Factor + (P + Down) * TaxFactor + Ins/12 + HOA = MaxPayment
// P * Factor + P * TaxFactor + Down * TaxFactor + Ins/12 + HOA = MaxPayment
// P * (Factor + TaxFactor) = MaxPayment – Down * TaxFactor – Ins/12 – HOA
// P = (MaxPayment – Down * TaxFactor – Ins/12 – HOA) / (Factor + TaxFactor)
var r = (rate / 100) / 12;
var n = years * 12;
var mortgageFactor = (r * Math.pow(1 + r, n)) / (Math.pow(1 + r, n) – 1);
var monthlyTaxRate = (taxRate / 100) / 12;
var monthlyInsurance = insuranceYearly / 12;
var availableForPIAndTax = maxMonthlyHousingPayment – monthlyInsurance – hoa;
var numerator = availableForPIAndTax – (downPayment * monthlyTaxRate);
var denominator = mortgageFactor + monthlyTaxRate;
var loanAmount = numerator / denominator;
if (loanAmount < 0) {
errorDiv.innerHTML = "Your debts are too high relative to your income to afford a home loan.";
return;
}
var maxHomePrice = loanAmount + downPayment;
var totalMonthlyPayment = (loanAmount * mortgageFactor) + (maxHomePrice * monthlyTaxRate) + monthlyInsurance + hoa;
// Recalculate ratios for display based on result
var frontEndRatio = (totalMonthlyPayment / monthlyIncome) * 100;
var backEndRatio = ((totalMonthlyPayment + debts) / monthlyIncome) * 100;
// Formatting
document.getElementById("macResultPrice").innerHTML = "$" + Math.floor(maxHomePrice).toLocaleString();
document.getElementById("macResultLoan").innerHTML = "$" + Math.floor(loanAmount).toLocaleString();
document.getElementById("macResultDown").innerHTML = "$" + Math.floor(downPayment).toLocaleString();
document.getElementById("macResultMonthly").innerHTML = "$" + Math.floor(totalMonthlyPayment).toLocaleString();
document.getElementById("macResultDTIFront").innerHTML = frontEndRatio.toFixed(1) + "%";
document.getElementById("macResultDTIBack").innerHTML = backEndRatio.toFixed(1) + "%";
resultDiv.style.display = "block";
}
How Much House Can You Really Afford?
Determining how much house you can afford is the critical first step in the home-buying process. While getting pre-approved by a lender gives you a specific number, using a Mortgage Affordability Calculator helps you understand the budget breakdown before you start shopping.
Understanding the 28/36 Rule
Most financial advisors and lenders use the 28/36 rule to determine affordability. This rule states that a household should spend a maximum of 28% of its gross monthly income on total housing expenses and no more than 36% on total debt service.
Front-End Ratio (28%): This includes your mortgage principal, interest, property taxes, home insurance, and HOA fees.
Back-End Ratio (36%): This includes all housing costs plus other debts like credit cards, car loans, and student loans.
Key Factors Affecting Your Buying Power
Several variables impact the maximum home price you can target:
1. Interest Rates
Even a small fluctuation in interest rates can significantly change your buying power. A higher rate increases your monthly payment, which lowers the total loan amount you qualify for based on your income.
2. Down Payment
A larger down payment reduces the loan amount required, lowering your monthly payments and potentially helping you avoid Private Mortgage Insurance (PMI), which further strains your monthly budget.
3. Debt-to-Income Ratio (DTI)
Your DTI is one of the most important metrics lenders review. Reducing your monthly recurring debts (like paying off a car loan) can drastically increase the mortgage amount you qualify for.
Hidden Costs of Homeownership
When calculating affordability, don't forget to account for costs beyond the mortgage payment. Property taxes vary significantly by location, and Homeowners Association (HOA) fees can add hundreds of dollars to your monthly obligation. This calculator factors these expenses in to give you a realistic "out-the-door" maximum home price.