Please enter valid positive numbers for all required fields.
You Can Afford A Home Up To:
$0
Monthly Payment Breakdown
Principal & Interest:$0
Property Tax:$0
Home Insurance:$0
HOA Fees:$0
Total Monthly Payment:$0
Note: This calculation assumes a maximum debt-to-income (DTI) ratio of 36% for total debts and 28% for housing expenses.
Understanding Your Home Affordability
Before you start house hunting, it is crucial to understand how much home you can realistically afford. This Mortgage Affordability Calculator uses standard lending ratios to estimate your purchasing power based on your income, debts, and current interest rates.
How Lenders Calculate Affordability
Lenders primarily use two metrics, known as Debt-to-Income (DTI) ratios, to determine your eligibility for a loan:
Front-End Ratio (28%): Typically, your monthly housing costs (mortgage principal, interest, taxes, insurance, and HOA) should not exceed 28% of your gross monthly income.
Back-End Ratio (36%): Your total monthly debt payments (including the new mortgage, credit cards, student loans, car payments, etc.) should not exceed 36% of your gross monthly income.
This calculator determines the maximum monthly payment allowed under both rules and uses the lower of the two to ensure you remain within safe lending limits.
Factors That Impact Your Buying Power
Several variables can significantly change how much house you can afford:
Interest Rates: Even a small increase in interest rates can reduce your buying power by thousands of dollars because more of your monthly payment goes toward interest rather than the principal.
Down Payment: A larger down payment reduces the loan amount needed, lowering your monthly payments and potentially allowing you to buy a more expensive home.
Existing Debt: Reducing credit card balances or paying off car loans lowers your back-end DTI ratio, freeing up more of your income for a mortgage payment.
Why Include Taxes and Insurance?
When you take out a mortgage, your monthly payment often includes more than just the loan repayment. It typically includes an escrow portion for Property Taxes and Homeowners Insurance. This calculator deducts these estimated costs from your maximum allowable monthly payment to give you a more accurate figure for the loan principal you can carry.
function calculateAffordability() {
// 1. Get Input Values
var annualIncome = parseFloat(document.getElementById('ma-annual-income').value);
var monthlyDebts = parseFloat(document.getElementById('ma-monthly-debts').value);
var downPayment = parseFloat(document.getElementById('ma-down-payment').value);
var interestRate = parseFloat(document.getElementById('ma-interest-rate').value);
var loanTermYears = parseInt(document.getElementById('ma-loan-term').value);
var annualTax = parseFloat(document.getElementById('ma-property-tax').value);
var annualInsurance = parseFloat(document.getElementById('ma-home-insurance').value);
var monthlyHOA = parseFloat(document.getElementById('ma-hoa').value);
// 2. Validate Inputs
var errorMsg = document.getElementById('ma-error-msg');
var resultSection = document.getElementById('ma-results');
if (isNaN(annualIncome) || isNaN(monthlyDebts) || isNaN(downPayment) ||
isNaN(interestRate) || isNaN(loanTermYears) || isNaN(annualTax) ||
isNaN(annualInsurance)) {
errorMsg.style.display = 'block';
resultSection.style.display = 'none';
return;
} else {
errorMsg.style.display = 'none';
}
if (isNaN(monthlyHOA)) monthlyHOA = 0;
// 3. Calculate Monthly Income and Expenses
var monthlyIncome = annualIncome / 12;
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
// 4. Calculate Max Allowable Housing Payment based on Ratios
// Rule 1: Front-End Ratio (Housing expenses max 28% of gross income)
var maxHousingFront = monthlyIncome * 0.28;
// Rule 2: Back-End Ratio (Total debts max 36% of gross income)
var maxTotalBack = monthlyIncome * 0.36;
var maxHousingBack = maxTotalBack – monthlyDebts;
// The limiting factor is the lower of the two
var maxTotalHousingPayment = Math.min(maxHousingFront, maxHousingBack);
// 5. Subtract Non-Mortgage Housing Costs (Tax, Ins, HOA) to find Max P&I
var nonLoanHousingCosts = monthlyTax + monthlyInsurance + monthlyHOA;
var maxMonthlyPI = maxTotalHousingPayment – nonLoanHousingCosts;
// Handle case where debts are too high
var maxLoanAmount = 0;
if (maxMonthlyPI > 0) {
// 6. Calculate Max Loan Amount using PV formula
// PV = PMT * ( (1 – (1+r)^-n) / r )
var r = (interestRate / 100) / 12;
var n = loanTermYears * 12;
if (r === 0) {
maxLoanAmount = maxMonthlyPI * n;
} else {
maxLoanAmount = maxMonthlyPI * ( (1 – Math.pow(1 + r, -n)) / r );
}
} else {
maxMonthlyPI = 0;
maxLoanAmount = 0;
}
// 7. Calculate Max Home Price
var maxHomePrice = maxLoanAmount + downPayment;
// If constraints are too tight, ensure negative numbers don't show
if (maxHomePrice < 0) maxHomePrice = 0;
// 8. Update UI
// Format Currency Helper
var formatCurrency = function(num) {
return num.toLocaleString('en-US', {style: 'currency', currency: 'USD', minimumFractionDigits: 0, maximumFractionDigits: 0});
};
document.getElementById('ma-max-home-price').innerText = formatCurrency(maxHomePrice);
// Breakdown updates
// Note: We display the breakdown based on the MAX affordable capability
document.getElementById('ma-result-pi').innerText = formatCurrency(maxMonthlyPI);
document.getElementById('ma-result-tax').innerText = formatCurrency(monthlyTax);
document.getElementById('ma-result-ins').innerText = formatCurrency(monthlyInsurance);
document.getElementById('ma-result-hoa').innerText = formatCurrency(monthlyHOA);
var totalCalc = maxMonthlyPI + monthlyTax + monthlyInsurance + monthlyHOA;
if(maxMonthlyPI === 0) totalCalc = 0; // Don't show taxes/ins if they can't afford the loan at all
document.getElementById('ma-result-total').innerText = formatCurrency(totalCalc);
resultSection.style.display = 'block';
}