Estimate the maximum home price you can afford based on your income and current debts.
Your Affordability Results
*This estimate covers Principal and Interest only. It does not include property taxes, PMI, or HOA fees.
How Much House Can You Afford?
Determining your home-buying budget is the most critical step in the real estate journey. While a bank might pre-approve you for a certain amount, true affordability depends on your personal comfort level, lifestyle, and long-term financial goals.
The 28/36 Rule Explained
Lenders often use the 28/36 rule to assess risk. This guideline suggests that your mortgage payment (Principal, Interest, Taxes, and Insurance) should not exceed 28% of your gross monthly income, and your total debt obligations (including the new mortgage) should not exceed 36%.
Key Factors Impacting Affordability
Debt-to-Income (DTI) Ratio: This is the percentage of your gross monthly income that goes toward paying debts. The lower the ratio, the more "room" you have for a mortgage.
Down Payment: A larger down payment reduces the loan amount, which lowers your monthly interest costs and can eliminate the need for Private Mortgage Insurance (PMI).
Interest Rates: Even a 1% change in interest rates can swing your buying power by tens of thousands of dollars.
Loan Term: A 15-year mortgage has higher monthly payments but costs significantly less in total interest than a 30-year mortgage.
Realistic Example Calculation
Factor
Conservative Scenario
Aggressive Scenario
Monthly Income
$7,000
$7,000
Monthly Debts
$400
$400
Target DTI
36%
43%
Max Monthly P&I
$2,120
$2,610
Affordable Home Price*
~$385,000
~$462,000
*Assuming 6.5% interest rate and 20% down payment.
Tips to Improve Your Affordability
If the calculator results are lower than you hoped, consider these strategies: Pay down high-interest credit card debt to lower your DTI, improve your credit score to secure a lower interest rate, or save for a larger down payment to reduce the principal loan amount.
function calculateMortgageAffordability() {
var income = parseFloat(document.getElementById('monthlyIncome').value);
var debts = parseFloat(document.getElementById('monthlyDebts').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTerm = parseFloat(document.getElementById('loanTerm').value);
var dtiLimit = parseFloat(document.getElementById('dtiLimit').value);
var resultDiv = document.getElementById('affordabilityResult');
if (isNaN(income) || isNaN(debts) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) || isNaN(dtiLimit)) {
alert("Please fill in all fields with valid numbers.");
return;
}
// Calculate maximum allowed monthly payment for Principal & Interest
var maxTotalMonthlyDebt = income * (dtiLimit / 100);
var maxMonthlyPI = maxTotalMonthlyDebt – debts;
if (maxMonthlyPI <= 0) {
resultDiv.style.display = "block";
resultDiv.innerHTML = "
Result: Infeasible
Your current monthly debts exceed the allowed DTI ratio for your income level. Consider reducing debt before applying for a mortgage.";
return;
}
// Mortgage Math: P = M / [i(1+i)^n / ((1+i)^n – 1)]
var monthlyInterest = (interestRate / 100) / 12;
var totalMonths = loanTerm * 12;
var principalLoan;
if (monthlyInterest === 0) {
principalLoan = maxMonthlyPI * totalMonths;
} else {
principalLoan = maxMonthlyPI * (Math.pow(1 + monthlyInterest, totalMonths) – 1) / (monthlyInterest * Math.pow(1 + monthlyInterest, totalMonths));
}
var maxHomePrice = principalLoan + downPayment;
// Update Results
resultDiv.style.display = "block";
document.getElementById('maxHomePrice').innerHTML = "Maximum Home Price: $" + maxHomePrice.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('maxMonthlyPI').innerHTML = "Maximum Monthly P&I: $" + maxMonthlyPI.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('totalLoanAmount').innerHTML = "Total Loan Amount: $" + principalLoan.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
}