Determine exactly how much house you can afford based on your annual income, monthly debts, and current mortgage interest rates. This calculator uses the standard 28/36 debt-to-income (DTI) rule used by most lenders to provide a realistic estimate of your purchasing power.
30 Years
20 Years
15 Years
10 Years
Please enter valid positive numbers for all fields.
Maximum Home Price
$0
Based on a % down payment
Max Monthly Payment
$0
Loan Amount
$0
Principal & Interest
$0
Est. Tax & Insurance
$0
Understanding Mortgage Affordability
When lenders decide how much money to lend you for a home purchase, they look primarily at your Debt-to-Income (DTI) Ratio. This calculator applies the industry-standard "28/36 Rule" to ensure the estimate is realistic.
The 28/36 Rule Explained
Front-End Ratio (28%): Your monthly housing costs (principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income.
Back-End Ratio (36%): Your total monthly debt payments (housing costs + car loans + student loans + credit cards) should not exceed 36% of your gross monthly income.
Our calculator computes both ratios based on your inputs and uses the lower (more conservative) number to determine your maximum budget. This prevents you from becoming "house poor."
Factors That Impact Your Buying Power
Several variables can significantly swing your affordability number:
Interest Rates: Even a 1% increase in rates can reduce your buying power by tens of thousands of dollars because more of your monthly payment goes toward interest rather than principal.
Existing Debt: High monthly obligations reduce the room in your budget for a mortgage. Paying off a car loan or credit card can immediately boost your home buying budget.
Down Payment: A larger down payment reduces the loan amount needed, lowering your monthly payment and potentially allowing you to buy a more expensive home.
How to Increase Your Affordability
If the result above is lower than you hoped, consider these strategies:
Pay down high-interest consumer debt to lower your monthly obligations.
Save for a larger down payment to reduce the loan principal.
Shop around for lower interest rates or consider buying "points" to lower the rate.
Look for areas with lower property taxes, as high taxes eat directly into your monthly payment capacity.
function calculateAffordability() {
// Get input elements
var elIncome = document.getElementById("annualIncome");
var elDebts = document.getElementById("monthlyDebts");
var elDownPayment = document.getElementById("downPayment");
var elRate = document.getElementById("interestRate");
var elTerm = document.getElementById("loanTerm");
var elTaxIns = document.getElementById("estimatedTaxIns");
var elError = document.getElementById("errorMsg");
var elResults = document.getElementById("results-area");
// Parse values
var income = parseFloat(elIncome.value);
var debts = parseFloat(elDebts.value);
var downPayment = parseFloat(elDownPayment.value);
var rate = parseFloat(elRate.value);
var termYears = parseFloat(elTerm.value);
var taxIns = parseFloat(elTaxIns.value);
// Validation
if (isNaN(income) || isNaN(debts) || isNaN(downPayment) || isNaN(rate) || isNaN(taxIns)) {
elError.style.display = "block";
elResults.style.display = "none";
return;
}
// Reset error
elError.style.display = "none";
// Logic
// 1. Calculate Monthly Gross Income
var monthlyGross = income / 12;
// 2. Determine Max Allowable Housing Payment based on 28/36 Rule
// Front End Limit (Housing only): 28% of Gross
var limitFrontEnd = monthlyGross * 0.28;
// Back End Limit (Total Debt): 36% of Gross
var limitBackEnd = monthlyGross * 0.36;
// Available for housing in Back End view = Total Limit – Current Monthly Debts
var availableBackEnd = limitBackEnd – debts;
// The bank will take the LOWER of the two limits
var maxTotalHousingPayment = Math.min(limitFrontEnd, availableBackEnd);
// If debts are too high, affordability might be zero or negative
if (maxTotalHousingPayment <= 0) {
maxTotalHousingPayment = 0;
}
// 3. Subtract Taxes and Insurance to find money available for Principal & Interest (P&I)
var availableForPI = maxTotalHousingPayment – taxIns;
if (availableForPI 0) {
if (monthlyRate === 0) {
maxLoanAmount = availableForPI * totalMonths;
} else {
maxLoanAmount = availableForPI * (1 – Math.pow(1 + monthlyRate, -totalMonths)) / monthlyRate;
}
}
// 5. Total Home Price
var maxHomePrice = maxLoanAmount + downPayment;
// Display Results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
maximumFractionDigits: 0
});
document.getElementById("resHomePrice").innerText = formatter.format(maxHomePrice);
var dpPercent = 0;
if(maxHomePrice > 0) {
dpPercent = (downPayment / maxHomePrice) * 100;
}
document.getElementById("resDownPayment").innerText = dpPercent.toFixed(1) + "%";
document.getElementById("resMaxMonthly").innerText = formatter.format(maxTotalHousingPayment);
document.getElementById("resLoanAmount").innerText = formatter.format(maxLoanAmount);
document.getElementById("resPI").innerText = formatter.format(availableForPI);
document.getElementById("resTaxIns").innerText = formatter.format(taxIns);
// Show result box
elResults.style.display = "block";
}