Please fill in all required fields with valid numbers.
You Can Afford A Home Price Of
$0
Est. Monthly Payment: $0
$0Principal & Interest
$0Property Tax
$0Home Insurance
How Much House Can I Afford?
Determining your home buying budget is the most critical first step in the real estate journey. This Home Affordability Calculator uses the standard 28/36 rule employed by most lenders to estimate the maximum home price you can comfortably afford based on your income, debts, and down payment.
Understanding the 28/36 Rule
Lenders use two primary ratios to determine your loan eligibility:
Front-End Ratio (28%): Your monthly housing costs (mortgage principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income.
Back-End Ratio (36%): Your total monthly debt payments (housing costs + credit cards, student loans, car loans) should not exceed 36% of your gross monthly income.
Our calculator computes both scenarios and uses the lower figure to ensure you stay within a safe financial limit.
Factors That Impact Your Affordability
Several variables can significantly change your buying power:
Down Payment: A larger down payment reduces the loan amount needed, lowering monthly payments and potentially allowing for a higher purchase price.
Interest Rate: Even a 1% difference in rates can change your buying power by tens of thousands of dollars. Lower rates mean lower monthly payments.
Monthly Debts: Reducing existing debts (like paying off a car or credit card) frees up more of your monthly income for a mortgage, boosting your affordability.
Property Taxes & Insurance: These are ongoing costs bundled into your monthly payment. High-tax areas reduce the amount of principal you can afford to borrow.
Frequently Asked Questions
Does this calculator include closing costs?
No, this calculator estimates the home price based on monthly affordability and down payment. Closing costs typically range from 2% to 5% of the loan amount and should be saved for separately from your down payment.
What is DTI?
DTI stands for Debt-to-Income ratio. It is a percentage that compares your total monthly debt payments to your gross monthly income. Lenders prefer a DTI of 36% or lower for the best interest rates and approval odds.
How can I increase the home price I can afford?
You can increase your affordability by increasing your down payment, paying down existing monthly debts to lower your DTI, improving your credit score to qualify for lower interest rates, or looking in areas with lower property taxes.
function formatMoney(num) {
return '$' + num.toFixed(0).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
}
function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById('annualIncome').value);
var monthlyDebts = parseFloat(document.getElementById('monthlyDebts').value) || 0;
var downPayment = parseFloat(document.getElementById('downPayment').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTermYears = parseInt(document.getElementById('loanTerm').value);
var propertyTaxYear = parseFloat(document.getElementById('propertyTax').value) || 0;
var homeInsuranceYear = parseFloat(document.getElementById('homeInsurance').value) || 0;
var errorDiv = document.getElementById('errorDisplay');
var resultBox = document.getElementById('resultBox');
// Validation
if (isNaN(annualIncome) || isNaN(downPayment) || isNaN(interestRate) || annualIncome <= 0) {
errorDiv.style.display = 'block';
resultBox.style.display = 'none';
return;
}
errorDiv.style.display = 'none';
// Monthly Income
var monthlyIncome = annualIncome / 12;
// Monthly Tax and Insurance
var monthlyTax = propertyTaxYear / 12;
var monthlyInsurance = homeInsuranceYear / 12;
var monthlyEscrow = monthlyTax + monthlyInsurance;
// Ratios
var frontEndLimit = 0.28;
var backEndLimit = 0.36;
// Max Payment Calculation
// 1. Based on Front End (Housing only)
var maxPaymentFront = monthlyIncome * frontEndLimit;
// 2. Based on Back End (Total Debt)
var maxTotalDebt = monthlyIncome * backEndLimit;
var maxPaymentBack = maxTotalDebt – monthlyDebts;
// Determine limiting factor (cannot be negative)
var maxAllowablePITI = Math.min(maxPaymentFront, maxPaymentBack);
if (maxAllowablePITI 0) {
// Mortgage Calculation: P = (M * (1 – (1+r)^-n)) / r
var r = (interestRate / 100) / 12;
var n = loanTermYears * 12;
// If interest rate is 0
if (r === 0) {
loanAmount = maxPI * n;
} else {
loanAmount = (maxPI * (1 – Math.pow(1 + r, -n))) / r;
}
}
var maxHomePrice = loanAmount + downPayment;
// Update UI
document.getElementById('resultHomePrice').innerHTML = formatMoney(maxHomePrice);
document.getElementById('resultMonthlyTotal').innerHTML = formatMoney(maxAllowablePITI);
document.getElementById('bdPrincipal').innerHTML = formatMoney(maxPI > 0 ? maxPI : 0);
document.getElementById('bdTax').innerHTML = formatMoney(monthlyTax);
document.getElementById('bdInsurance').innerHTML = formatMoney(monthlyInsurance);
resultBox.style.display = 'block';
// Scroll to result
resultBox.scrollIntoView({behavior: "smooth"});
}