Determine how much house you can realistically afford based on your income, debts, and current interest rates. This calculator uses a standard conservative debt-to-income ratio to estimate your maximum purchasing power.
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function calculateAffordability() {
var annualIncomeInput = document.getElementById("annualIncome").value;
var monthlyDebtsInput = document.getElementById("monthlyDebts").value;
var downPaymentInput = document.getElementById("downPayment").value;
var interestRateInput = document.getElementById("interestRate").value;
var loanTermInput = document.getElementById("loanTerm").value;
var estTaxInsuranceInput = document.getElementById("estTaxInsurance").value;
var resultDiv = document.getElementById("affordabilityResult");
// Validate required inputs
if (annualIncomeInput === "" || interestRateInput === "" || loanTermInput === "") {
resultDiv.style.display = "block";
resultDiv.innerHTML = "Please fill in at least Income, Interest Rate, and Loan Term.";
return;
}
var annualIncome = parseFloat(annualIncomeInput);
var monthlyDebts = monthlyDebtsInput === "" ? 0 : parseFloat(monthlyDebtsInput);
var downPayment = downPaymentInput === "" ? 0 : parseFloat(downPaymentInput);
var interestRate = parseFloat(interestRateInput);
var loanTerm = parseInt(loanTermInput);
var estAnnualTaxInsurance = estTaxInsuranceInput === "" ? 0 : parseFloat(estTaxInsuranceInput);
if (isNaN(annualIncome) || isNaN(interestRate) || isNaN(loanTerm) || annualIncome <= 0) {
resultDiv.style.display = "block";
resultDiv.innerHTML = "Please enter valid positive numbers.";
return;
}
// Affordability Logic based on back-end DTI
// Using a conservative 36% rule for total debt service ratio
var maxBackEndDTI = 0.36;
var monthlyGrossIncome = annualIncome / 12;
var maxTotalMonthlyAllowedDebt = monthlyGrossIncome * maxBackEndDTI;
// Calculate maximum amount available for the new mortgage payment (PITI)
// Max Mortgage Payment = (Gross Monthly Income * 0.36) – Existing Monthly Debts
var maxAffordableHousingPayment = maxTotalMonthlyAllowedDebt – monthlyDebts;
var monthlyTaxAndInsurance = estAnnualTaxInsurance / 12;
// Principal and Interest part available
var maxAvailableForPI = maxAffordableHousingPayment – monthlyTaxAndInsurance;
if (maxAvailableForPI <= 0) {
resultDiv.style.display = "block";
resultDiv.innerHTML = "Based on the provided debts and income, it appears you may not qualify for a standard mortgage at this time. Your current monthly debts exceed the recommended threshold.";
return;
}
// Calculate Max Loan Amount based on the available P&I payment
// Mortgage formula backwards: P = (M * (1 – (1 + r)^-n)) / r
// Where M is monthly payment, r is monthly rate, n is total payments
var monthlyInterestRate = (interestRate / 100) / 12;
var totalNumberOfPayments = loanTerm * 12;
// Handle zero interest rate edge case
var maxLoanAmount;
if (monthlyInterestRate === 0) {
maxLoanAmount = maxAvailableForPI * totalNumberOfPayments;
} else {
var mathFactor = Math.pow(1 + monthlyInterestRate, -totalNumberOfPayments);
maxLoanAmount = (maxAvailableForPI * (1 – mathFactor)) / monthlyInterestRate;
}
var maxHomePrice = maxLoanAmount + downPayment;
// Formatting functions
var formatCurrency = function(num) {
return "$" + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
};
resultDiv.style.display = "block";
resultDiv.innerHTML =
"
" +
"Estimated Monthly Payment (PITI): " + formatCurrency(maxAffordableHousingPayment) + "" +
"*Based on a conservative 36% back-end Debt-to-Income ratio guideline. This includes principal, interest, estimated taxes, and insurance." +
"
";
}
Understanding Your Mortgage Affordability
Determining "how much house can I afford" is the crucial first step in the home buying process. Lenders don't just look at your salary; they analyze your complete financial profile to ensure you can comfortably manage monthly mortgage payments alongside your existing financial obligations.
This calculator uses a standard lender guideline known as the Debt-to-Income (DTI) ratio to estimate your borrowing power. Specifically, it applies a conservative "back-end ratio," which typically suggests that your total monthly debt payments—including the new mortgage, property taxes, homeowners insurance, plus existing debts like car loans, student loans, and minimum credit card payments—should not exceed roughly 36% to 43% of your gross monthly income.
Key Factors Influencing What You Can Afford
Gross Annual Income: This is your total income before taxes. It forms the baseline for calculating how much monthly debt you can handle. For example, an annual income of $90,000 equals a gross monthly income of $7,500.
Existing Monthly Debts: This is the biggest hurdle for many buyers. If your gross monthly income is $7,500, and lenders allow up to 36% for total debt ($2,700), having $800 in existing car and student loan payments reduces your available mortgage payment capacity to $1,900.
The Down Payment: The more cash you put down upfront, the more house you can buy for the same monthly payment. A larger down payment also reduces the loan-to-value (LTV) ratio, potentially securing better interest rates and avoiding Private Mortgage Insurance (PMI).
Interest Rates: Your mortgage rate directly dictates your purchasing power. A 1% increase in interest rates can significantly reduce the loan amount you qualify for, even if the monthly payment amount remains the same.
The 28/36 Rule Explained
While lender criteria vary, many use the "28/36 rule" as a benchmark for conventional loans. This rule states that a household should spend no more than 28% of its gross monthly income on total housing expenses (Principal, Interest, Taxes, and Insurance – PITI), and no more than 36% on total debt service, which includes housing expenses plus other recurring debts. Our calculator focuses on the total debt (back-end) ratio to give a realistic view of affordability constrained by existing obligations.
Remember, this calculator provides an estimate based on standard guidelines. For a definitive pre-approval amount, you must consult with a qualified mortgage lender who will review your credit score, employment history, and specific financial documents.