function calculateAffordability() {
// Inputs
var annualIncome = parseFloat(document.getElementById('mac_annual_income').value);
var monthlyDebt = parseFloat(document.getElementById('mac_monthly_debt').value);
var downPayment = parseFloat(document.getElementById('mac_down_payment').value);
var interestRate = parseFloat(document.getElementById('mac_interest_rate').value);
var loanTerm = parseInt(document.getElementById('mac_loan_term').value);
var propertyTaxRate = parseFloat(document.getElementById('mac_property_tax').value);
var insurance = parseFloat(document.getElementById('mac_home_insurance').value);
var strategy = document.getElementById('mac_dti_limit').value;
// Validation
if (isNaN(annualIncome) || annualIncome <= 0) {
alert("Please enter a valid Annual Income.");
return;
}
if (isNaN(monthlyDebt)) monthlyDebt = 0;
if (isNaN(downPayment)) downPayment = 0;
if (isNaN(interestRate) || interestRate <= 0) {
alert("Please enter a valid Interest Rate.");
return;
}
if (isNaN(insurance)) insurance = 1200;
if (isNaN(propertyTaxRate)) propertyTaxRate = 1.2;
var monthlyIncome = annualIncome / 12;
var monthlyInsurance = insurance / 12;
// DTI Ratios based on strategy
// Conservative: 28% front-end, 36% back-end
// Aggressive: 36% front-end, 43% back-end (typical FHA/Conventional max limits)
var frontEndRatio = (strategy === 'conservative') ? 0.28 : 0.36;
var backEndRatio = (strategy === 'conservative') ? 0.36 : 0.45;
// Calculate Max Monthly Payment allowed
// Limit 1: Based on Income alone (Front End)
var maxPaymentFront = monthlyIncome * frontEndRatio;
// Limit 2: Based on Income minus Debts (Back End)
var maxTotalObligation = monthlyIncome * backEndRatio;
var maxPaymentBack = maxTotalObligation – monthlyDebt;
// The max allowed payment for housing (P&I + Tax + Ins + HOA) is the lower of the two
var maxAllowedHousingPayment = Math.min(maxPaymentFront, maxPaymentBack);
// If debts are too high, affordability might be 0 or negative
if (maxAllowedHousingPayment <= 0) {
document.getElementById('mac_res_home_price').innerHTML = "$0";
document.getElementById('mac_res_loan_amount').innerHTML = "$0";
document.getElementById('mac_res_pi').innerHTML = "$0";
document.getElementById('mac_res_total_monthly').innerHTML = "$0";
document.getElementById('mac_result_box').style.display = 'block';
alert("Your monthly debts are too high relative to your income to afford a mortgage under these parameters.");
return;
}
// We need to solve for the Home Price (P_home).
// Total Monthly = P&I + Tax + Insurance
// P&I depends on Loan Amount. Loan Amount = Home Price – Down Payment.
// Tax depends on Home Price.
// Insurance is fixed estimate here.
// var X be the max affordable Home Price.
// Loan Amount (L) = X – Down Payment
// Tax (T) = (X * (propertyTaxRate / 100)) / 12
// P&I Factor (F) = (r * (1+r)^n) / ((1+r)^n – 1)
// P&I = (X – Down Payment) * F
// Equation:
// maxAllowedHousingPayment = [(X – Down Payment) * F] + [(X * TaxRate/12)] + monthlyInsurance
// maxAllowedHousingPayment – monthlyInsurance = X*F – DownPayment*F + X*TaxRate/12
// maxAllowedHousingPayment – monthlyInsurance + DownPayment*F = X * (F + TaxRate/12)
// X = (maxAllowedHousingPayment – monthlyInsurance + (DownPayment * F)) / (F + TaxRate/12)
var r = (interestRate / 100) / 12; // Monthly interest rate
var n = loanTerm * 12; // Total months
// Mortgage Factor
var mortgageFactor = (r * Math.pow(1 + r, n)) / (Math.pow(1 + r, n) – 1);
var monthlyTaxRate = (propertyTaxRate / 100) / 12;
var numerator = maxAllowedHousingPayment – monthlyInsurance + (downPayment * mortgageFactor);
var denominator = mortgageFactor + monthlyTaxRate;
var maxHomePrice = numerator / denominator;
// Logic check: If calculated loan is negative (because downpayment is huge?), handle it.
// However, with this formula, if maxHomePrice < downPayment, it implies no loan needed or calculations skewed.
// We ensure Home Price is at least the down payment.
if (maxHomePrice < downPayment) {
maxHomePrice = downPayment; // You can afford what you have in cash
}
var loanAmount = maxHomePrice – downPayment;
var monthlyPI = loanAmount * mortgageFactor;
var monthlyTax = maxHomePrice * monthlyTaxRate;
var totalMonthly = monthlyPI + monthlyTax + monthlyInsurance;
// Update DOM
document.getElementById('mac_res_home_price').innerHTML = "$" + Math.floor(maxHomePrice).toLocaleString();
document.getElementById('mac_res_loan_amount').innerHTML = "$" + Math.floor(loanAmount).toLocaleString();
document.getElementById('mac_res_pi').innerHTML = "$" + Math.floor(monthlyPI).toLocaleString();
document.getElementById('mac_res_total_monthly').innerHTML = "$" + Math.floor(totalMonthly).toLocaleString();
document.getElementById('mac_result_box').style.display = 'block';
}
How Much House Can I Afford?
Understanding your home affordability is the crucial first step in the home buying process. This Mortgage Affordability Calculator uses your financial inputs to reverse-engineer the maximum home price you can purchase while remaining financially healthy. It considers not just the principal and interest, but also the critical "hidden" costs like property taxes and homeowners insurance.
How Affordability is Calculated
Lenders use specific metrics called Debt-to-Income (DTI) Ratios to decide how much money they are willing to lend you. There are two types of ratios evaluated:
Front-End Ratio: This is the percentage of your gross monthly income that goes toward housing costs (Mortgage principal, interest, taxes, and insurance). A conservative standard is 28%.
Back-End Ratio: This includes your housing costs plus all other monthly debts (student loans, car payments, credit cards). A standard conservative limit is 36%.
Conservative vs. Aggressive Strategies
This calculator allows you to toggle between a "Conservative" and "Aggressive" calculation:
Conservative (The 28/36 Rule): This is recommended for financial peace of mind. It ensures you aren't "house poor" and have money left over for savings, maintenance, and lifestyle.
Aggressive: This pushes the DTI limits higher (often up to 45% or 50% back-end DTI). While you may get approved for this amount by a lender, it represents a higher financial risk.
Factors Affecting Your Buying Power
Several variables impact the final price of the home you can buy:
Down Payment: A larger down payment reduces the loan amount needed, lowering your monthly payments and increasing your purchasing power.
Interest Rates: Even a 1% difference in interest rates can swing your purchasing power by tens of thousands of dollars.
Monthly Debts: Reducing your recurring monthly debts (like paying off a car) is the fastest way to increase your mortgage affordability.
Property Taxes: High-tax areas reduce the amount of mortgage you can afford, as more of your monthly payment cap goes toward taxes rather than the loan principal.
Next Steps
Once you have an estimate, it is recommended to get a pre-approval from a licensed mortgage lender. They will verify your income and credit score to give you a concrete number for your house hunt.