After Tax Salary Calculator

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Home Affordability Calculator

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

Your Estimated Home Buying Power

Monthly P&I:
Monthly Tax/Ins:
Total Monthly Payment:
DTI Ratio Used: 36%

How Much House Can I Afford?

Determining your home buying power is the first step in the real estate journey. Lenders don't just look at your salary; they look at your Debt-to-Income (DTI) ratio. This calculator uses the "28/36 Rule," a standard gold metric used by financial institutions to assess mortgage risk.

Understanding the 28/36 Rule

Most lenders prefer that your total housing costs do not exceed 28% of your gross monthly income, and your total debt payments (including the new mortgage) do not exceed 36%. Here is what goes into the calculation:

  • Gross Annual Income: Your total earnings before taxes and deductions.
  • Monthly Debts: These include recurring payments like car loans, student loans, and minimum credit card payments.
  • Down Payment: The cash you have upfront. A higher down payment reduces your loan amount and monthly interest.
  • Interest Rate: Even a 1% difference in rates can change your buying power by tens of thousands of dollars.

Example Calculation

If you earn $100,000 per year, your gross monthly income is $8,333. Under the 36% rule, your total monthly debt payments (mortgage + existing debts) should stay under $3,000. If you already pay $500/month for a car loan, your maximum available mortgage payment is $2,500.

Factors That Increase Your Buying Power

To increase the amount you can borrow, consider the following strategies:

  1. Improve your Credit Score: Higher scores qualify for lower interest rates.
  2. Pay Down Existing Debt: Reducing your car or credit card payments directly increases the "room" in your DTI ratio.
  3. Save for a Larger Down Payment: This decreases the loan-to-value ratio and may eliminate the need for Private Mortgage Insurance (PMI).
function calculateAffordability() { var income = parseFloat(document.getElementById('afford_income').value); var downPayment = parseFloat(document.getElementById('afford_downpayment').value); var monthlyDebt = parseFloat(document.getElementById('afford_debts').value); var annualInterest = parseFloat(document.getElementById('afford_interest').value); var termYears = parseInt(document.getElementById('afford_term').value); var taxRate = parseFloat(document.getElementById('afford_property_tax').value) / 100; if (isNaN(income) || isNaN(downPayment) || isNaN(monthlyDebt) || isNaN(annualInterest)) { alert("Please enter valid numerical values."); return; } // 1. Calculate Monthly Gross Income var monthlyGross = income / 12; // 2. Maximum Monthly Debt (36% Rule) var maxTotalMonthlyDebt = monthlyGross * 0.36; // 3. Maximum Monthly Housing Payment (Total PITI) var maxMonthlyPITI = maxTotalMonthlyDebt – monthlyDebt; // 4. Estimate Insurance and PMI (approx 0.15% of home value monthly for simplicity in this model) // We need to back-calculate home price from PITI. // PITI = P&I + Tax + Insurance // P&I = (Loan * r * (1+r)^n) / ((1+r)^n – 1) // Tax = (HomePrice * taxRate) / 12 // Insurance = (HomePrice * 0.0035) / 12 (approximate) var r = (annualInterest / 100) / 12; var n = termYears * 12; // Algebra to solve for Home Price (H): // Loan (L) = H – DownPayment // PI_Factor = (r * (1+r)^n) / ((1+r)^n – 1) // Monthly PI = (H – DownPayment) * PI_Factor // Monthly Tax = H * (taxRate / 12) // Monthly Ins = H * (0.0035 / 12) // maxMonthlyPITI = [(H – DownPayment) * PI_Factor] + [H * (taxRate / 12)] + [H * (0.0003)] var piFactor = (r * Math.pow(1 + r, n)) / (Math.pow(1 + r, n) – 1); var taxFactor = taxRate / 12; var insFactor = 0.00035; // Rough estimate for homeowners insurance // H * (piFactor + taxFactor + insFactor) – (DownPayment * piFactor) = maxMonthlyPITI // H = (maxMonthlyPITI + (DownPayment * piFactor)) / (piFactor + taxFactor + insFactor) var maxHomePrice = (maxMonthlyPITI + (downPayment * piFactor)) / (piFactor + taxFactor + insFactor); if (maxHomePrice < downPayment) { maxHomePrice = downPayment; } var loanAmount = maxHomePrice – downPayment; if (loanAmount < 0) loanAmount = 0; var monthlyPI = loanAmount * piFactor; var monthlyTaxIns = (maxHomePrice * taxFactor) + (maxHomePrice * insFactor); var totalPayment = monthlyPI + monthlyTaxIns; // Display results document.getElementById('afford_results').style.display = 'block'; document.getElementById('afford_max_price').innerHTML = '$' + Math.round(maxHomePrice).toLocaleString(); document.getElementById('afford_res_pi').innerHTML = '$' + Math.round(monthlyPI).toLocaleString(); document.getElementById('afford_res_tax').innerHTML = '$' + Math.round(monthlyTaxIns).toLocaleString(); document.getElementById('afford_res_total').innerHTML = '$' + Math.round(totalPayment).toLocaleString(); // Scroll to results on mobile document.getElementById('afford_results').scrollIntoView({ behavior: 'smooth', block: 'nearest' }); }

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