Please enter valid positive numbers for income and interest rate.
Maximum Home Price You Can Afford
$0
Loan Amount: $0
Estimated Monthly Payment Breakdown:
Principal & Interest:$0
Property Taxes:$0
Home Insurance:$0
HOA Fees:$0
Total Monthly Payment:$0
Note: This calculation uses the standard 28/36 rule used by most lenders. It assumes your housing expenses shouldn't exceed 28% of gross income, and total debts shouldn't exceed 36%.
How Much House Can You Really Afford?
Determining your budget is the first and most critical step in the home-buying process. While many potential buyers focus solely on the mortgage interest rate or the down payment, true affordability is determined by your Debt-to-Income (DTI) ratio.
This Mortgage Affordability Calculator uses the industry-standard "28/36 Rule" to give you a realistic estimate of your borrowing power. Understanding how this works can help you prepare your finances before applying for a pre-approval.
Understanding the 28/36 Rule
Lenders use two primary metrics to decide how much money they are willing to lend you:
The Front-End Ratio (28%): This rule states that your total monthly housing costs—including mortgage principal, interest, property taxes, home insurance, and HOA fees—should not exceed 28% of your gross monthly income.
The Back-End Ratio (36%): This rule looks at your total debt load. It states that your total monthly housing costs plus all other monthly debt payments (credit cards, student loans, car payments) should not exceed 36% of your gross monthly income.
The calculator determines the maximum monthly payment allowed under both rules and uses the lower of the two to determine your budget. This prevents you from becoming "house poor."
Key Factors Affecting Your Affordability
1. Down Payment
Your down payment significantly impacts your affordability range. Not only does it reduce the amount you need to borrow, but a larger down payment (typically 20% or more) eliminates the need for Private Mortgage Insurance (PMI), reducing your monthly costs and allowing you to afford a higher-priced home.
2. Interest Rates
Even a small change in interest rates can drastically alter your buying power. For example, on a $300,000 loan, a 1% increase in interest rate reduces your buying power by approximately 10-11%. It is crucial to lock in a rate or improve your credit score to secure the lowest possible rate.
3. Property Taxes and HOA Fees
Many buyers forget to factor in property taxes and Homeowners Association (HOA) fees. In some areas, high property taxes can reduce your purchasing power by tens of thousands of dollars. Always check the specific tax rate of the municipality where you are looking to buy.
How to Improve Your Home Affordability
If the result from the calculator is lower than home prices in your target area, consider these strategies:
Pay down high-interest debt: reducing your monthly credit card or car payments lowers your back-end DTI ratio, directly increasing the amount available for a mortgage.
Save for a larger down payment: This reduces the principal loan amount and monthly interest costs.
Look for lower tax areas: Moving just one town over could save significantly on annual property taxes.
function calculateAffordability() {
// 1. Get Inputs
var incomeAnnual = parseFloat(document.getElementById("annualIncome").value);
var debtsMonthly = parseFloat(document.getElementById("monthlyDebts").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRatePercent = parseFloat(document.getElementById("interestRate").value);
var termYears = parseFloat(document.getElementById("loanTerm").value);
var taxRatePercent = parseFloat(document.getElementById("propertyTaxRate").value);
var insuranceAnnual = parseFloat(document.getElementById("homeInsurance").value);
var hoaMonthly = parseFloat(document.getElementById("hoaFees").value);
// 2. Validation
if (isNaN(incomeAnnual) || incomeAnnual <= 0 || isNaN(interestRatePercent) || isNaN(termYears)) {
document.getElementById("errorMsg").style.display = "block";
document.getElementById("resultContainer").style.display = "none";
return;
}
document.getElementById("errorMsg").style.display = "none";
// Handle optional fields inputs as 0 if empty/NaN
if (isNaN(debtsMonthly)) debtsMonthly = 0;
if (isNaN(downPayment)) downPayment = 0;
if (isNaN(taxRatePercent)) taxRatePercent = 0;
if (isNaN(insuranceAnnual)) insuranceAnnual = 0;
if (isNaN(hoaMonthly)) hoaMonthly = 0;
// 3. Logic Constants
var incomeMonthly = incomeAnnual / 12;
var insuranceMonthly = insuranceAnnual / 12;
var taxRateMonthly = (taxRatePercent / 100) / 12;
var monthlyRate = (interestRatePercent / 100) / 12;
var numPayments = termYears * 12;
// 4. Calculate Max Allowable Housing Payment (The lesser of Front-End or Back-End)
// Front-End: 28% of Gross Income
var limitFrontEnd = incomeMonthly * 0.28;
// Back-End: 36% of Gross Income minus existing debts
var limitBackEnd = (incomeMonthly * 0.36) – debtsMonthly;
// The ceiling for total housing payment (P&I + Tax + Ins + HOA)
var maxTotalMonthlyPayment = Math.min(limitFrontEnd, limitBackEnd);
// If debts are too high, result might be negative
if (maxTotalMonthlyPayment <= 0) {
displayZeroResults();
return;
}
// 5. Reverse Engineer Loan Amount
// We know: MaxTotal = P&I + Tax + Insurance + HOA
// P&I depends on Loan (L)
// Tax depends on Home Price (H = L + DownPayment)
// Equation: MaxTotal = (L * MortgageFactor) + ((L + Down) * TaxRateMonthly) + InsuranceMonthly + HOA
// Subtract fixed costs (Insurance, HOA) from the budget first
var availableForPIandTax = maxTotalMonthlyPayment – insuranceMonthly – hoaMonthly;
if (availableForPIandTax <= 0) {
displayZeroResults();
return;
}
// Calculate Mortgage Factor (Principal & Interest per dollar borrowed)
// Formula: (r * (1+r)^n) / ((1+r)^n – 1)
var mortgageFactor = 0;
if (monthlyRate === 0) {
mortgageFactor = 1 / numPayments;
} else {
var pow = Math.pow(1 + monthlyRate, numPayments);
mortgageFactor = (monthlyRate * pow) / (pow – 1);
}
// Derived Formula for Loan Amount (L):
// availableForPIandTax = (L * mortgageFactor) + (L * taxRateMonthly) + (DownPayment * taxRateMonthly)
// availableForPIandTax – (DownPayment * taxRateMonthly) = L * (mortgageFactor + taxRateMonthly)
// L = (availableForPIandTax – (DownPayment * taxRateMonthly)) / (mortgageFactor + taxRateMonthly)
var loanAmount = (availableForPIandTax – (downPayment * taxRateMonthly)) / (mortgageFactor + taxRateMonthly);
if (loanAmount < 0) {
// If the tax on the downpayment alone exceeds the budget, they can't afford a loan.
// However, they might be able to afford a home price equal to downpayment if taxes/ins allow,
// but this calculator assumes they want a mortgage.
// Let's check if they can just afford the taxes/hoa on the downpayment amount.
loanAmount = 0;
}
var maxHomePrice = loanAmount + downPayment;
// 6. Calculate breakdown based on this derived Home Price
var monthlyTax = maxHomePrice * taxRateMonthly;
var monthlyPI = loanAmount * mortgageFactor;
// 7. Output Results
document.getElementById("maxHomePrice").innerText = formatCurrency(maxHomePrice);
document.getElementById("loanAmountDisplay").innerText = "Loan Amount: " + formatCurrency(loanAmount);
document.getElementById("resPI").innerText = formatCurrency(monthlyPI);
document.getElementById("resTax").innerText = formatCurrency(monthlyTax);
document.getElementById("resIns").innerText = formatCurrency(insuranceMonthly);
document.getElementById("resHOA").innerText = formatCurrency(hoaMonthly);
var totalCalc = monthlyPI + monthlyTax + insuranceMonthly + hoaMonthly;
document.getElementById("resTotal").innerText = formatCurrency(totalCalc);
document.getElementById("resultContainer").style.display = "block";
}
function displayZeroResults() {
document.getElementById("maxHomePrice").innerText = "$0";
document.getElementById("loanAmountDisplay").innerText = "Loan Amount: $0";
document.getElementById("resPI").innerText = "$0";
document.getElementById("resTax").innerText = "$0";
document.getElementById("resIns").innerText = "$0";
document.getElementById("resHOA").innerText = "$0";
document.getElementById("resTotal").innerText = "$0";
document.getElementById("resultContainer").style.display = "block";
}
function formatCurrency(num) {
return "$" + num.toLocaleString('en-US', {minimumFractionDigits: 0, maximumFractionDigits: 0});
}