1099 Tax Rate 2013 Calculator

Mortgage Affordability Calculator

Determine how much house you can realistically afford based on your income, existing debts, and current mortgage rates using the standard 28%/36% debt-to-income (DTI) ratios used by most lenders.

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Please enter valid numeric values for all required fields.

*PITI includes Principal, Interest, estimated Taxes, and Insurance. This assumes a qualifying back-end DTI of 36%.

function calculateMortgageAffordability() { var annualIncome = parseFloat(document.getElementById("annualIncome").value); var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value); var downPaymentAvailable = parseFloat(document.getElementById("downPaymentAvailable").value); var interestRate = parseFloat(document.getElementById("interestRate").value); var loanTermYears = parseInt(document.getElementById("loanTermYears").value); var annualPropertyTaxRate = parseFloat(document.getElementById("annualPropertyTaxRate").value); var annualHomeInsurance = parseFloat(document.getElementById("annualHomeInsurance").value); var errorDiv = document.getElementById("errorMessage"); var resultDiv = document.getElementById("affordabilityResult"); if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPaymentAvailable) || isNaN(interestRate) || isNaN(loanTermYears) || annualIncome <= 0) { errorDiv.style.display = "block"; resultDiv.style.display = "none"; return; } errorDiv.style.display = "none"; // Constants for DTI Ratios var frontEndRatioCap = 0.28; // Max housing cost vs gross income var backEndRatioCap = 0.36; // Max total debt vs gross income var grossMonthlyIncome = annualIncome / 12; // 1. Calculate Max Allowed Housing Payment based on Front-End Ratio (28%) var maxHousingFrontEnd = grossMonthlyIncome * frontEndRatioCap; // 2. Calculate Max Allowed Housing Payment based on Back-End Ratio (36%) var maxTotal MonthlyDebtAllowed = grossMonthlyIncome * backEndRatioCap; var maxHousingBackEnd = maxTotalMonthlyDebtAllowed – monthlyDebt; // The actual affordable amount is the LOWER of the two constraint calculations // We ensure it's not negative if current debts are very high var affordableTotalMonthlyPayment = Math.max(0, Math.min(maxHousingFrontEnd, maxHousingBackEnd)); // Calculate components to back into the loan amount // We need to estimate taxes and insurance to subtract them from the affordable total, leaving P&I var monthlyInsuranceEst = annualHomeInsurance / 12; // Tax is tricky as it depends on price, which we don't know yet. // We will estimate tax based on a rough price first, then iterate once for better accuracy. // Initial rough guess: assume tax is based on a price roughly 4x income. var roughPriceGuess = annualIncome * 4; var monthlyTaxEst = (roughPriceGuess * (annualPropertyTaxRate / 100)) / 12; var availableForPI = affordableTotalMonthlyPayment – monthlyTaxEst – monthlyInsuranceEst; if (availableForPI 0) { maxLoanAmount = (availableForPI * (1 – Math.pow(1 + monthlyRate, -totalPayments))) / monthlyRate; } else { maxLoanAmount = 0; } var finalMaxHomePrice = maxLoanAmount + downPaymentAvailable; var finalTotalMonthlyPayment = availableForPI + refinedMonthlyTax + monthlyInsuranceEst; // Formatting output var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 }); document.getElementById("maxHomePriceResult").innerHTML = formatter.format(finalMaxHomePrice); document.getElementById("maxLoanAmountResult").innerHTML = formatter.format(maxLoanAmount); document.getElementById("totalMonthlyPaymentResult").innerHTML = formatter.format(finalTotalMonthlyPayment); resultDiv.style.display = "block"; }

Understanding Mortgage Affordability and DTI Ratios

When lenders decide how much money they are willing to lend you for a home purchase, they primarily look at your ability to repay the loan along with your other existing financial obligations. The primary metric used for this is the **Debt-to-Income (DTI) ratio**.

Most conventional lenders adhere to the "28/36 rule" to determine affordability:

• The Front-End Ratio (Housing Ratio – 28%): The total monthly cost of the new home (principal, interest, property taxes, and insurance, collectively known as PITI) should not exceed 28% of your gross monthly income.
• The Back-End Ratio (Total Debt Ratio – 36%): Your total monthly debt payments—including the new house payment plus existing obligations like car payments, student loans, and credit card minimums—should not exceed 36% of your gross monthly income.

This calculator determines the maximum monthly payment allowed by both rules and uses the lower figure to ensure you meet both lender requirements.

Factors That Influence Your Purchasing Power

1. Gross Annual Income: A higher income increases your allowable monthly payment limits.
2. Existing Monthly Debt: This is crucial. A $500/month car payment directly reduces the amount of mortgage payment you can qualify for dollar-for-dollar on the back-end ratio.
3. Interest Rate: Lower interest rates mean more of your monthly payment goes toward principal, allowing you to borrow a larger loan amount for the same monthly cost.
4. Down Payment: The more cash you have upfront, the higher the final home price you can afford, as the loan amount calculated by income is added to your down payment savings.

Example Scenario

Let's look at a realistic example of how DTI caps affordability:

• Gross Income: $90,000 annually ($7,500 monthly)
• Existing Debt: $600 monthly (student loans and a car)
• Down Payment: $40,000
• Interest Rate: 7.0% on a 30-year fixed term

The Math:

1. 28% Front-End Limit: $7,500 x 0.28 = $2,100 max for housing alone.
2. 36% Back-End Limit: $7,500 x 0.36 = $2,700 total allowed debt. Subtracting existing debt ($2,700 – $600) leaves $2,100 for housing.

In this scenario, the borrower is capped at a $2,100 total monthly housing payment. After estimating taxes and insurance, this payment might support a loan amount of approximately $245,000. Adding the $40,000 down payment, their maximum affordable home price would be roughly $285,000.

Note: While some loan programs (like FHA or VA loans) allow for higher DTI ratios, sticking to the conventional 28/36 rule is generally recommended for long-term financial stability.