Amazon Fba Cost Calculator

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Home Affordability Calculator

Determine how much house you can realistically afford based on your income and debts.

Your Estimated Home Budget

How to Use the Home Affordability Calculator

Finding the perfect home starts with understanding your financial boundaries. Our Home Affordability Calculator uses the standard Debt-to-Income (DTI) ratios employed by most major lenders to estimate the maximum home price you can sustain without overextending your finances.

The 28/36 Rule Explained

Lenders typically follow the "28/36 rule" to evaluate mortgage applications:

  • Front-End Ratio (28%): Your total monthly housing costs (principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income.
  • Back-End Ratio (36%): Your total monthly debt obligations (including your new mortgage plus car loans, student loans, and credit card payments) should not exceed 36% to 43% of your gross monthly income.

Factors That Influence Your Budget

While income is the primary driver, several other factors play a critical role in your final number:

  1. Down Payment: A larger down payment reduces the loan-to-value ratio, potentially lowering your interest rate and eliminating the need for Private Mortgage Insurance (PMI).
  2. Interest Rates: Even a 1% difference in interest rates can change your purchasing power by tens of thousands of dollars over a 30-year term.
  3. Monthly Debts: High recurring debts like car payments or student loans directly reduce the amount a bank is willing to lend you for a mortgage.

Example Calculation

If you earn $100,000 per year, your gross monthly income is $8,333. Using a conservative 36% DTI ratio, your total monthly debt limit is $3,000. If you already have a $500 car payment, you have $2,500 available for your mortgage, taxes, and insurance. With a 6.5% interest rate and a $60,000 down payment, you could afford a home priced at approximately $415,000.

function calculateHomeAffordability() { var annualIncome = parseFloat(document.getElementById('annualIncome').value); var downPayment = parseFloat(document.getElementById('downPayment').value); var monthlyDebt = parseFloat(document.getElementById('monthlyDebt').value); var annualRate = parseFloat(document.getElementById('interestRate').value); var termYears = parseFloat(document.getElementById('loanTerm').value); var taxInsuranceRate = parseFloat(document.getElementById('propertyTax').value) / 100; if (isNaN(annualIncome) || isNaN(downPayment) || isNaN(monthlyDebt) || isNaN(annualRate)) { alert("Please enter valid numerical values."); return; } // Standard DTI approach (Back-end ratio of 36%) var monthlyGrossIncome = annualIncome / 12; var maxTotalMonthlyDebt = monthlyGrossIncome * 0.36; var availableForPITI = maxTotalMonthlyDebt – monthlyDebt; if (availableForPITI <= 0) { document.getElementById('affordabilityResult').style.display = "block"; document.getElementById('totalBudget').innerHTML = "Check Debt"; document.getElementById('totalBudget').style.color = "#d93025"; document.getElementById('monthlyPI').innerHTML = "Your current monthly debts exceed the recommended 36% debt-to-income ratio."; return; } // Solve for Principal (P) // Monthly PITI = P * [ i(1 + i)^n ] / [ (1 + i)^n – 1 ] + (HomePrice * TaxRate / 12) // HomePrice = P + DownPayment // var M = [ i(1 + i)^n ] / [ (1 + i)^n – 1 ] // availableForPITI = P * M + (P + DownPayment) * (TaxRate / 12) // availableForPITI = P * (M + TaxRate / 12) + (DownPayment * TaxRate / 12) // P = (availableForPITI – (DownPayment * TaxRate / 12)) / (M + TaxRate / 12) var i = (annualRate / 100) / 12; var n = termYears * 12; var factorM = (i * Math.pow(1 + i, n)) / (Math.pow(1 + i, n) – 1); var monthlyTaxFactor = taxInsuranceRate / 12; var loanAmount = (availableForPITI – (downPayment * monthlyTaxFactor)) / (factorM + monthlyTaxFactor); var maxHomePrice = loanAmount + downPayment; if (maxHomePrice < downPayment) { maxHomePrice = downPayment; } var monthlyPI = loanAmount * factorM; var monthlyTax = maxHomePrice * monthlyTaxFactor; document.getElementById('affordabilityResult').style.display = "block"; document.getElementById('totalBudget').style.color = "#1e8e3e"; document.getElementById('totalBudget').innerHTML = "$" + Math.round(maxHomePrice).toLocaleString(); document.getElementById('monthlyPI').innerHTML = "Est. Monthly Payment (P&I): $" + Math.round(monthlyPI).toLocaleString() + "" + "Est. Monthly Taxes/Ins: $" + Math.round(monthlyTax).toLocaleString() + "" + "Total Monthly PITI: $" + Math.round(monthlyPI + monthlyTax).toLocaleString(); document.getElementById('dtiStatus').innerHTML = "Based on a 36% Back-End Debt-to-Income Ratio."; }

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