Conservative (28%)
Standard (36%)
Aggressive (43%)
You Can Afford A Home Price Of:
$0
Monthly Payment:$0
Loan Amount:$0
*Includes Principal, Interest, Taxes, and Insurance (PITI)
Understanding Home Affordability
Determine exactly how much house you can afford involves analyzing your debt-to-income (DTI) ratio, down payment savings, and current interest rates. This calculator uses the industry-standard front-end and back-end ratio guidelines to estimate a safe purchasing price.
Key Factors Affecting Your Budget
Debt-to-Income Ratio (DTI): Lenders prefer your total monthly debts (including the new mortgage) not to exceed 36% to 43% of your gross monthly income.
Down Payment: A larger down payment reduces your loan amount and monthly payments, increasing your purchasing power. Putting down less than 20% may trigger Private Mortgage Insurance (PMI) costs.
Interest Rates: Even a 1% difference in rates can significantly impact your buying power. Higher rates increase monthly interest costs, reducing the total loan amount you qualify for.
Property Taxes & Insurance: These "hidden" costs are part of your monthly escrow payment. In high-tax areas, your purchasing power will be lower compared to low-tax regions.
The 28/36 Rule Explained
Financial experts often cite the 28/36 rule for home affordability. This rule suggests spending no more than 28% of your gross monthly income on housing expenses (principal, interest, taxes, insurance) and no more than 36% on total debt (housing + other debts like student loans or credit cards).
function calculateAffordability() {
// 1. Get Values
var income = parseFloat(document.getElementById('annualIncome').value);
var debts = parseFloat(document.getElementById('monthlyDebt').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var years = parseInt(document.getElementById('loanTerm').value);
var taxRate = parseFloat(document.getElementById('propertyTaxRate').value);
var insurance = parseFloat(document.getElementById('homeInsurance').value);
var dtiLimit = parseFloat(document.getElementById('dtiRatio').value);
// 2. Validation
if (isNaN(income) || income <= 0) {
alert("Please enter a valid annual income.");
return;
}
if (isNaN(rate) || rate < 0) {
alert("Please enter a valid interest rate.");
return;
}
if (isNaN(debts)) debts = 0;
if (isNaN(downPayment)) downPayment = 0;
if (isNaN(taxRate)) taxRate = 1.2;
if (isNaN(insurance)) insurance = 1200;
// 3. Logic
var monthlyIncome = income / 12;
var maxTotalMonthlyDebt = monthlyIncome * dtiLimit;
// Available for housing = Max Total Debt – Existing Debts
var availableForHousing = maxTotalMonthlyDebt – debts;
// If debts are too high, affordability is zero
if (availableForHousing <= 0) {
document.getElementById('result-area').style.display = 'block';
document.getElementById('maxHomePrice').innerText = "$0";
document.getElementById('monthlyPaymentResult').innerText = "$0";
document.getElementById('loanAmountResult').innerText = "$0";
return;
}
// We need to solve for Home Price (P).
// Monthly Payment = PrincipalAndInterest(LoanAmount) + Tax + Insurance
// LoanAmount = P – DownPayment
// Tax = (P * (TaxRate/100)) / 12
// Insurance = Insurance / 12
// P&I Factor calculation
var monthlyRate = rate / 100 / 12;
var numberOfPayments = years * 12;
var mortgageFactor = 0;
if (rate === 0) {
mortgageFactor = 1 / numberOfPayments;
} else {
mortgageFactor = (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// Equation: Available = ( (P – DownPayment) * mortgageFactor ) + ( P * taxMonthlyRate ) + insuranceMonthly
// Available – insuranceMonthly + (DownPayment * mortgageFactor) = P * (mortgageFactor + taxMonthlyRate)
// P = (Available – insuranceMonthly + (DownPayment * mortgageFactor)) / (mortgageFactor + taxMonthlyRate)
var taxMonthlyRate = (taxRate / 100) / 12;
var insuranceMonthly = insurance / 12;
var numerator = availableForHousing – insuranceMonthly + (downPayment * mortgageFactor);
var denominator = mortgageFactor + taxMonthlyRate;
var maxHomePrice = numerator / denominator;
// Edge case: calculated price is less than down payment (math artifact if debts are high)
if (maxHomePrice < downPayment) {
maxHomePrice = downPayment; // You can afford what you have in cash
}
var loanAmount = maxHomePrice – downPayment;
if (loanAmount < 0) loanAmount = 0;
// Recalculate actual PITI to display
var principalInterest = loanAmount * mortgageFactor;
var taxPayment = maxHomePrice * taxMonthlyRate;
var totalMonthly = principalInterest + taxPayment + insuranceMonthly;
// 4. Output Formatting
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
maximumFractionDigits: 0
});
document.getElementById('maxHomePrice').innerText = formatter.format(maxHomePrice);
document.getElementById('monthlyPaymentResult').innerText = formatter.format(totalMonthly) + " /mo";
document.getElementById('loanAmountResult').innerText = formatter.format(loanAmount);
// Show result
document.getElementById('result-area').style.display = 'block';
}