Estimate the maximum home price you can afford based on your income and debts.
Estimated Max Home Price:
Estimated Max Monthly Payment (P&I):
Estimated Total Monthly (Taxes/Ins):
Required Loan Amount:
How Much House Can You Really Afford?
When buying a home, the most critical question isn't just "What is the list price?" but "What is the monthly impact on my lifestyle?" Our Home Affordability Calculator uses the Debt-to-Income (DTI) ratio, a standard used by mortgage lenders, to help you determine a realistic budget.
Understanding the 36% Rule
Lenders typically prefer that your total monthly debt payments (including your new mortgage, property taxes, insurance, car loans, and student loans) do not exceed 36% of your gross monthly income. This calculator defaults to a conservative estimate to ensure you don't become "house poor."
Key Factors in Home Affordability
Gross Income: Your total earnings before taxes. Lenders use this to gauge your repayment capacity.
Monthly Debt: Includes credit cards, student loans, and car payments. Higher debt reduces the amount you can borrow for a home.
Interest Rates: Even a 1% difference in interest rates can change your purchasing power by tens of thousands of dollars.
Down Payment: The more you put down, the lower your monthly payment and the higher the home price you can afford.
Real-World Example
If you earn $100,000 per year and have $500 in monthly debt, a 6.5% interest rate on a 30-year term might allow for a home price of approximately $425,000 with a $50,000 down payment. However, local property taxes and homeowners insurance vary significantly by state, which can adjust your final "buying power."
function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById('annualIncome').value) || 0;
var monthlyDebt = parseFloat(document.getElementById('monthlyDebt').value) || 0;
var downPayment = parseFloat(document.getElementById('downPayment').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var loanTerm = parseFloat(document.getElementById('loanTerm').value) || 30;
var taxRate = parseFloat(document.getElementById('propertyTax').value) || 1.2;
if (annualIncome <= 0 || interestRate <= 0) {
alert("Please enter valid positive values for income and interest rate.");
return;
}
// 1. Calculate Max Monthly DTI (Debt-to-Income) at 36%
var monthlyGross = annualIncome / 12;
var maxTotalMonthlyAllowed = monthlyGross * 0.36;
// 2. Subtract current debts to find available amount for PITI (Principal, Interest, Taxes, Insurance)
var availableForPITI = maxTotalMonthlyAllowed – monthlyDebt;
if (availableForPITI <= 0) {
alert("Your current monthly debts exceed the recommended 36% DTI ratio. Consider reducing debt before purchasing.");
return;
}
// 3. Estimate monthly taxes and insurance (roughly 20% of the PITI goes to taxes/ins)
// We adjust the PITI to isolate the P&I (Principal and Interest)
// Formula: P&I = AvailablePITI – (Estimated Monthly Tax + Insurance)
// Roughly, let's assume monthly taxes/ins cost 1.5% of home value annually
// This requires an iterative approach or an algebraic estimation.
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
// Calculation for Principal P: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
// var X = [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
// P = M / X
var x = (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
// Adjust for Property Tax Rate (annual rate / 12)
// Monthly Tax = (HomePrice * (TaxRate/100)) / 12
// Monthly Insurance = (HomePrice * 0.0035) / 12 (Estimation)
// AvailableForPITI = (P * x) + (HomePrice * (TaxRate/100)/12) + (HomePrice * 0.0035/12)
// HomePrice = P + DownPayment
// AvailableForPITI = (P * x) + ((P + DownPayment) * (TaxRate/100 + 0.35)/12)
var annualTaxAndInsRate = (taxRate / 100) + 0.0035; // 0.35% for insurance
var monthlyTaxInsFactor = annualTaxAndInsRate / 12;
// Solve for P: AvailableForPITI = P*x + P*Factor + DownPayment*Factor
// P = (AvailableForPITI – DownPayment*Factor) / (x + monthlyTaxInsFactor)
var principal = (availableForPITI – (downPayment * monthlyTaxInsFactor)) / (x + monthlyTaxInsFactor);
if (principal < 0) principal = 0;
var homePrice = principal + downPayment;
var monthlyPI = principal * x;
var totalMonthly = monthlyPI + (homePrice * monthlyTaxInsFactor);
// Display results
document.getElementById('affordabilityResult').style.display = 'block';
document.getElementById('maxHomePrice').innerText = '$' + homePrice.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('maxMonthlyPI').innerText = '$' + monthlyPI.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalMonthly').innerText = '$' + totalMonthly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('loanAmount').innerText = '$' + principal.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
// Smooth scroll to result
document.getElementById('affordabilityResult').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}