Find out how much house you can actually afford based on your income and debts.
30 Years Fixed
20 Years Fixed
15 Years Fixed
10 Years Fixed
Your Home Buying Power
Estimated Home Price:$0
Estimated Loan Amount:$0
Max Monthly P&I Payment:$0
Total Monthly Housing Cost:$0
How Is Home Affordability Calculated?
Buying a home is the most significant financial decision most people will ever make. To determine how much you can afford, lenders typically look at your Debt-to-Income (DTI) ratio. This calculator uses the standard "Back-End Ratio" of 36%, which suggests that your total monthly debt payments (including your new mortgage, taxes, and insurance) should not exceed 36% of your gross monthly income.
Key Factors Affecting Your Budget
Gross Annual Income: Your total income before taxes. Lenders use this as the starting point for your borrowing capacity.
Debt-to-Income Ratio: Most conventional loans prefer a DTI below 36%, though some programs like FHA allow up to 43% or even 50% in specific cases.
Down Payment: The more cash you put down, the lower your monthly payment and the higher the home price you can afford.
Interest Rates: Even a 1% difference in interest rates can change your buying power by tens of thousands of dollars.
Property Taxes & Insurance: These "hidden" costs are part of your monthly PITI (Principal, Interest, Taxes, and Insurance) payment.
Example Calculation
If you earn $85,000 per year, your monthly gross income is $7,083. Using a 36% DTI limit, your total allowed monthly debt is $2,550. If you already have a $400 car payment, you have $2,150 left for your mortgage, taxes, and insurance. At a 6.5% interest rate on a 30-year term, this supports a home price of approximately $325,000 with a $20,000 down payment.
Tips to Increase Your Home Budget
Pay down high-interest debt: Reducing your monthly credit card or loan payments directly increases the amount a bank will lend you for a home.
Improve your credit score: A higher score qualifies you for lower interest rates, which lowers your monthly payment.
Save for a larger down payment: This reduces the loan-to-value ratio and may eliminate the need for Private Mortgage Insurance (PMI).
function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var interestRate = parseFloat(document.getElementById("interestRate").value) / 100 / 12;
var loanTermYears = parseInt(document.getElementById("loanTerm").value);
var propertyTaxRate = parseFloat(document.getElementById("propertyTax").value) / 100;
var months = loanTermYears * 12;
if (isNaN(annualIncome) || isNaN(downPayment) || isNaN(monthlyDebt) || isNaN(interestRate)) {
alert("Please enter valid numeric values.");
return;
}
// 1. Calculate Max Monthly Housing Debt (using 36% DTI rule)
var monthlyGrossIncome = annualIncome / 12;
var maxTotalMonthlyDebt = monthlyGrossIncome * 0.36;
var availableForHousing = maxTotalMonthlyDebt – monthlyDebt;
if (availableForHousing <= 0) {
alert("Your current debts exceed the recommended 36% Debt-to-Income ratio for your income level.");
return;
}
// 2. Estimate Taxes and Insurance (approx 1.2% tax + $150 insurance)
// We need to solve for Loan (L) where:
// Available = [L * (i(1+i)^n) / ((1+i)^n – 1)] + (L+Down)*Tax/12 + Insurance
var monthlyInsurance = 150; // Estimated monthly homeowners insurance
var monthlyTaxFactor = propertyTaxRate / 12;
// Formula for monthly P&I: P = L * [i(1+i)^n] / [(1+i)^n – 1]
var factor = (interestRate * Math.pow(1 + interestRate, months)) / (Math.pow(1 + interestRate, months) – 1);
// availableForHousing = L * factor + (L + downPayment) * monthlyTaxFactor + monthlyInsurance
// availableForHousing – monthlyInsurance – (downPayment * monthlyTaxFactor) = L * (factor + monthlyTaxFactor)
var numerator = availableForHousing – monthlyInsurance – (downPayment * monthlyTaxFactor);
var denominator = factor + monthlyTaxFactor;
var loanAmount = numerator / denominator;
if (loanAmount <= 0) {
alert("Based on your inputs, the estimated costs (taxes/insurance) exceed your housing budget.");
return;
}
var homePrice = loanAmount + downPayment;
var monthlyPI = loanAmount * factor;
var totalMonthlyCost = monthlyPI + (homePrice * monthlyTaxFactor) + monthlyInsurance;
// Display Results
document.getElementById("resHomePrice").innerText = "$" + Math.round(homePrice).toLocaleString();
document.getElementById("resLoanAmount").innerText = "$" + Math.round(loanAmount).toLocaleString();
document.getElementById("resMonthlyPayment").innerText = "$" + Math.round(monthlyPI).toLocaleString();
document.getElementById("resTotalCost").innerText = "$" + Math.round(totalMonthlyCost).toLocaleString();
document.getElementById("results").style.display = "block";
// Scroll to results on mobile
document.getElementById("results").scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}