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Mortgage Affordability Calculator

30-Year Fixed 15-Year Fixed 20-Year Fixed

Your Home Buying Power

Estimated Max Home Price

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Monthly PITI Payment

$0

function calculateAffordability() { var annualIncome = parseFloat(document.getElementById("annualIncome").value); var monthlyDebts = parseFloat(document.getElementById("monthlyDebts").value) || 0; var downPayment = parseFloat(document.getElementById("downPayment").value) || 0; var interestRate = parseFloat(document.getElementById("interestRate").value) / 100 / 12; var loanTermYears = parseInt(document.getElementById("loanTerm").value); var annualCosts = parseFloat(document.getElementById("annualCosts").value) || 0; if (isNaN(annualIncome) || isNaN(interestRate) || annualIncome <= 0) { alert("Please enter valid income and interest rate values."); return; } // Mortgage Rule of Thumb: Total debt-to-income (DTI) ratio should not exceed 36% // Front-end ratio (housing only) usually 28% // Let's use the 36% back-end ratio as the conservative standard var monthlyGrossIncome = annualIncome / 12; var maxTotalMonthlyDebt = monthlyGrossIncome * 0.36; var maxMonthlyHousingPayment = maxTotalMonthlyDebt – monthlyDebts; // Subtract taxes and insurance to find allowed Principal + Interest var monthlyTaxIns = annualCosts / 12; var maxPI = maxMonthlyHousingPayment – monthlyTaxIns; if (maxPI <= 0) { document.getElementById("resultsArea").style.display = "block"; document.getElementById("resHomePrice").innerText = "Ineligible"; document.getElementById("resMonthlyPayment").innerText = "N/A"; document.getElementById("resBreakdown").innerText = "Based on your current debt and income, your monthly obligations exceed the recommended 36% DTI ratio. Consider reducing debt or increasing your down payment."; return; } // Solve for Loan Amount (P) in M = P [ r(1 + r)^n ] / [ (1 + r)^n – 1 ] var numberOfPayments = loanTermYears * 12; var powerCalc = Math.pow(1 + interestRate, numberOfPayments); var loanAmount = maxPI * (powerCalc – 1) / (interestRate * powerCalc); var totalHomePrice = loanAmount + downPayment; // Update UI document.getElementById("resultsArea").style.display = "block"; document.getElementById("resHomePrice").innerText = "$" + Math.round(totalHomePrice).toLocaleString(); document.getElementById("resMonthlyPayment").innerText = "$" + Math.round(maxMonthlyHousingPayment).toLocaleString(); document.getElementById("resBreakdown").innerHTML = "Analysis: At a 36% debt-to-income ratio, your maximum allowed monthly payment (including taxes and insurance) is $" + Math.round(maxMonthlyHousingPayment).toLocaleString() + ". With your $" + downPayment.toLocaleString() + " down payment, you can afford a home worth approximately $" + Math.round(totalHomePrice).toLocaleString() + "."; // Smooth scroll to results document.getElementById("resultsArea").scrollIntoView({ behavior: 'smooth' }); }

How Much House Can I Afford?

Understanding your mortgage affordability is the most critical step in the home-buying process. Before you start touring open houses, you need to know exactly what a lender is likely to offer you and what your monthly budget can actually sustain. Most financial experts recommend the 28/36 rule, which suggests your mortgage should not exceed 28% of your gross monthly income, and your total debt should not exceed 36%.

Key Factors in Mortgage Affordability

Lenders look at several variables to determine your "buying power." To use our calculator effectively, it helps to understand these components:

  • Gross Annual Income: This is your total income before taxes. Lenders use this as the baseline for your repayment capacity.
  • Debt-to-Income Ratio (DTI): This is the percentage of your gross monthly income that goes toward paying debts (car loans, student loans, credit cards). A lower DTI means higher borrowing power.
  • Down Payment: The more cash you bring to the table, the lower your loan-to-value (LTV) ratio, which often results in better interest rates and higher home price eligibility.
  • Interest Rates: Even a 1% difference in interest rates can shift your buying power by tens of thousands of dollars over a 30-year term.

A Practical Example

Imagine the following scenario for a typical home buyer:

  • Income: $100,000 per year ($8,333/month)
  • Monthly Debts: $400 (Car loan)
  • Down Payment: $60,000
  • Current Interest Rate: 6.5%

Using the 36% DTI rule, the maximum total debt allowed would be $3,000. Subtracting the $400 car loan leaves $2,600 for the monthly mortgage payment (Principal, Interest, Taxes, and Insurance). This buyer could likely afford a home priced around $415,000 depending on local property tax rates.

How to Increase Your Buying Power

If the results of the calculator are lower than you hoped, there are three primary levers you can pull:

  1. Pay Down Existing Debt: Reducing your monthly car or credit card payments immediately increases the "gap" available for a mortgage payment.
  2. Improve Your Credit Score: A higher credit score qualifies you for lower interest rates, which lowers your monthly cost per dollar borrowed.
  3. Save a Larger Down Payment: This directly reduces the amount you need to borrow, lowering the interest burden.
Note: This calculator provides an estimate based on standard debt-to-income ratios. Real-world lending depends on your credit score, employment history, and specific loan products like FHA or VA loans.

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