Interest Rate Calculator Loans

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Home Affordability Calculator

Determine how much house you can realistically afford based on your income and debts.

30 Years 15 Years 20 Years

Your Estimated Affordability

Conservative (36% DTI) $0
Aggressive (43% DTI) $0

Estimated Monthly Payment (P&I): $0

Estimated Monthly Taxes: $0

*Calculations assume a standard mortgage model and do not include HOA fees or Private Mortgage Insurance (PMI).

function calculateAffordability() { var annualIncome = parseFloat(document.getElementById('annualIncome').value); var monthlyDebt = parseFloat(document.getElementById('monthlyDebt').value); var downPayment = parseFloat(document.getElementById('downPayment').value); var interestRate = parseFloat(document.getElementById('interestRate').value) / 100 / 12; var loanTermMonths = parseFloat(document.getElementById('loanTerm').value) * 12; var taxRate = parseFloat(document.getElementById('propertyTax').value) / 100 / 12; if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(interestRate)) { alert("Please enter valid numbers in all fields."); return; } var monthlyGrossIncome = annualIncome / 12; function solveForPrice(dtiRatio) { var totalAllowableMonthly = monthlyGrossIncome * dtiRatio; var maxMonthlyBudget = totalAllowableMonthly – monthlyDebt; if (maxMonthlyBudget 0 ? price : 0; } var consPrice = solveForPrice(0.36); var aggrPrice = solveForPrice(0.43); document.getElementById('conservativePrice').innerText = "$" + consPrice.toLocaleString(undefined, {maximumFractionDigits: 0}); document.getElementById('aggressivePrice').innerText = "$" + aggrPrice.toLocaleString(undefined, {maximumFractionDigits: 0}); var consLoan = consPrice – downPayment; var factor = (interestRate * Math.pow(1 + interestRate, loanTermMonths)) / (Math.pow(1 + interestRate, loanTermMonths) – 1); var pi = consLoan * factor; var tax = consPrice * taxRate; document.getElementById('monthlyPI').innerText = "$" + (pi > 0 ? pi.toFixed(2) : "0.00"); document.getElementById('monthlyTaxes').innerText = "$" + (tax > 0 ? tax.toFixed(2) : "0.00"); document.getElementById('results-area').style.display = 'block'; }

Understanding How Much Home You Can Afford

Buying a home is the most significant financial commitment most people ever make. Using a home affordability calculator helps you move beyond "guesstimates" to understand the actual numbers lenders look at when approving a mortgage.

Key Factors in the Affordability Formula

  • Debt-to-Income (DTI) Ratio: Lenders typically look for a DTI ratio between 36% and 43%. This represents the percentage of your gross monthly income that goes toward paying debts (including your new mortgage).
  • The Down Payment: A larger down payment reduces your loan amount, which lowers your monthly interest costs and can help you avoid Private Mortgage Insurance (PMI).
  • Interest Rates: Even a 1% difference in interest rates can change your purchasing power by tens of thousands of dollars over the life of a 30-year loan.
  • Property Taxes: These vary significantly by location. Our calculator includes a tax estimation because property taxes are usually bundled into your monthly escrow payment.

Example Calculation

Suppose a couple earns a combined $100,000 per year with $600 in monthly recurring debts (car loans and student loans). If they have $40,000 saved for a down payment and the current interest rate is 6.5%:

  1. Their gross monthly income is $8,333.
  2. At a conservative 36% DTI, their total monthly debt limit is $3,000.
  3. After subtracting existing debt ($600), they have $2,400 available for their mortgage and taxes.
  4. Based on these figures, they could afford a home priced at approximately $355,000.

Tips to Increase Your Buying Power

If the results of the calculator are lower than you hoped, consider these strategies:

  1. Pay Down Revolving Debt: Reducing credit card balances or car loans lowers your DTI ratio instantly.
  2. Improve Your Credit Score: A higher score qualifies you for lower interest rates, significantly increasing the loan amount you can afford for the same monthly payment.
  3. Consider a 15-Year vs 30-Year Term: While a 15-year mortgage has higher monthly payments, it drastically reduces the total interest paid and often comes with a lower interest rate.

Note: While this calculator provides a mathematical estimate, it's always wise to get pre-approved by a lender to account for specific credit history factors and current market fluctuations.

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