Use this calculator to estimate how much house you can afford based on your income, debts, and down payment.
function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) ||
annualIncome <= 0 || monthlyDebt < 0 || downPayment < 0 || interestRate <= 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Standard DTI ratios for front-end and back-end (typical lender guidelines)
// Front-end ratio: Housing costs (PITI) should be no more than 28% of gross monthly income
// Back-end ratio: Total debt (PITI + other debts) should be no more than 36% of gross monthly income
var maxFrontEndRatio = 0.28;
var maxBackEndRatio = 0.36;
var monthlyIncome = annualIncome / 12;
// Calculate maximum PITI (Principal, Interest, Taxes, Insurance) based on both ratios
var maxPITI_frontEnd = monthlyIncome * maxFrontEndRatio;
var maxPITI_backEnd = (monthlyIncome * maxBackEndRatio) – monthlyDebt;
var maxPITI = Math.min(maxPITI_frontEnd, maxPITI_backEnd);
if (maxPITI 0) {
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
maxLoanAmount = maxPITI * (numerator / denominator);
} else { // Handle case for 0% interest rate, though unlikely for mortgages
maxLoanAmount = maxPITI * numberOfPayments;
}
// Calculate estimated maximum home price
var maxHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML = `
Estimated Maximum Home Price You Can Afford: $${maxHomePrice.toFixed(2)}
Disclaimer: This is an estimate. Actual affordability depends on lender guidelines, credit score, property taxes, insurance costs, HOA fees, and other factors. It's recommended to consult with a mortgage professional.
`;
}
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Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. Lenders use a variety of factors to assess your borrowing capacity, but two key metrics they often look at are Debt-to-Income (DTI) ratios. Your DTI helps them understand your ability to manage monthly payments.
Debt-to-Income (DTI) Ratios Explained
Your DTI compares your total monthly debt payments to your gross monthly income (your income before taxes and other deductions). Lenders typically look at two types of DTI:
1. Front-End DTI (Housing Ratio):
This ratio compares your potential total monthly housing costs (including principal, interest, property taxes, homeowner's insurance, and potentially HOA fees – often referred to as PITI) to your gross monthly income. A common guideline is that your PITI should not exceed 28% of your gross monthly income.
2. Back-End DTI (Total Debt Ratio):
This ratio compares all of your recurring monthly debt obligations (including your potential mortgage PITI payment PLUS minimum payments for credit cards, car loans, student loans, personal loans, etc.) to your gross monthly income. A common guideline is that your total debt payments should not exceed 36% of your gross monthly income. Some loan programs may allow for higher DTIs, but this is a typical benchmark.
How the Calculator Works
This mortgage affordability calculator uses these DTI guidelines to provide an estimate:
Calculate Monthly Income: Your annual gross income is divided by 12 to find your gross monthly income.
Determine Maximum Housing Payment (PITI): The calculator assesses both the front-end (28%) and back-end (36% minus your existing monthly debts) limits to find the most restrictive maximum monthly housing payment you can afford.
Estimate Loan Amount: Using the maximum affordable monthly housing payment, the estimated interest rate, and the loan term, the calculator applies a standard mortgage formula to determine the maximum loan principal you could support.
Calculate Maximum Home Price: Your estimated maximum loan amount is added to your down payment to estimate the maximum home price you might be able to afford.
Important Considerations:
Estimates Only: This calculator provides a general estimate. Actual loan approvals depend on a lender's specific underwriting criteria, your credit score, employment history, assets, and the specific property you intend to purchase.
Property Taxes and Insurance: The calculator simplifies the estimation of property taxes and homeowner's insurance. These costs vary significantly by location and property type.
Closing Costs: This calculator does not account for closing costs, which can add several percentage points to the overall cost of buying a home.
HOA Fees: If the property has a Homeowners Association, its monthly fees will be an additional cost that needs to be factored into your housing budget.
Other Loan Programs: Different mortgage programs (e.g., FHA, VA) have different DTI requirements and loan limits.
For an accurate assessment, it's always best to speak with a qualified mortgage lender or broker.