Determine exactly how much house you can afford based on your income, debts, and current interest rates using the industry-standard 28/36 rule.
30 Years
20 Years
15 Years
10 Years
Please enter valid positive numbers for Income and Interest Rate.
Maximum Home Price
$0
Max Monthly Mortgage Payment (P&I):$0
Loan Amount:$0
Qualifying Factor:–
*Includes estimated taxes and insurance in monthly qualification analysis.
function calculateAffordability() {
// 1. Get Elements by ID
var incomeInput = document.getElementById('aff_annual_income');
var debtsInput = document.getElementById('aff_monthly_debts');
var downInput = document.getElementById('aff_down_payment');
var rateInput = document.getElementById('aff_interest_rate');
var termInput = document.getElementById('aff_loan_term');
var taxInput = document.getElementById('aff_prop_tax');
var insInput = document.getElementById('aff_home_insurance');
var errorDiv = document.getElementById('aff_error');
var resultsDiv = document.getElementById('aff_results');
// 2. Parse Values
var annualIncome = parseFloat(incomeInput.value) || 0;
var monthlyDebts = parseFloat(debtsInput.value) || 0;
var downPayment = parseFloat(downInput.value) || 0;
var interestRate = parseFloat(rateInput.value) || 0;
var years = parseInt(termInput.value) || 30;
var annualTax = parseFloat(taxInput.value) || 0;
var annualIns = parseFloat(insInput.value) || 0;
// 3. Validation
if (annualIncome <= 0 || interestRate <= 0) {
errorDiv.style.display = 'block';
resultsDiv.style.display = 'none';
return;
}
errorDiv.style.display = 'none';
// 4. Calculations (The 28/36 Rule)
var monthlyIncome = annualIncome / 12;
var monthlyTax = annualTax / 12;
var monthlyIns = annualIns / 12;
// Front-End Ratio (28% of gross income for housing)
var maxHousingFront = monthlyIncome * 0.28;
// Back-End Ratio (36% of gross income for housing + debts)
var maxTotalBack = monthlyIncome * 0.36;
var maxHousingBack = maxTotalBack – monthlyDebts;
// The bank takes the lower of the two
var maxAllowableHousingPayment = Math.min(maxHousingFront, maxHousingBack);
var limitingFactor = (maxHousingFront allowable payment, you can't afford a loan
if (maxAvailablePI > 0) {
// Reverse Mortgage Formula to find Principal (Loan Amount)
// P = ( M * (1 – (1+r)^-n) ) / r
var r = (interestRate / 100) / 12;
var n = years * 12;
// Standard PV formula: PV = PMT * [ (1 – (1+r)^-n) / r ]
maxLoanAmount = maxAvailablePI * ( (1 – Math.pow(1 + r, -n)) / r );
maxHomePrice = maxLoanAmount + downPayment;
} else {
maxLoanAmount = 0;
maxHomePrice = downPayment; // Can only afford what you put down
maxAvailablePI = 0;
}
// 5. Output Formatting
function formatCurrency(num) {
return '$' + num.toFixed(0).replace(/(\d)(?=(\d{3})+(?!\d))/g, '$1,');
}
document.getElementById('res_max_home_price').innerHTML = formatCurrency(maxHomePrice);
document.getElementById('res_monthly_pi').innerHTML = formatCurrency(maxAvailablePI);
document.getElementById('res_loan_amount').innerHTML = formatCurrency(maxLoanAmount);
document.getElementById('res_limiting_factor').innerHTML = limitingFactor;
// Show results
resultsDiv.style.display = 'block';
}
Understanding Home Affordability
Buying a home is one of the largest financial decisions you will make. While it is tempting to focus solely on the mortgage interest rate or the listing price, true affordability is determined by your Debt-to-Income (DTI) ratio. Lenders use specific formulas to ensure you don't overextend yourself financially.
The 28/36 Rule Explained
Most conventional lenders utilize the "28/36 Rule" to determine how much money they are willing to lend you. This calculator uses this exact logic to estimate your purchasing power.
The Front-End Ratio (28%): Your total monthly housing costs (Mortgage Principal & Interest, Property Taxes, and Homeowners Insurance) should not exceed 28% of your gross monthly income.
The Back-End Ratio (36%): Your total housing costs plus all other monthly debt payments (credit cards, student loans, car payments, alimony) should not exceed 36% of your gross monthly income.
Expert Tip: If you have high monthly debts (like a large car payment or student loans), your affordability will likely be capped by the Back-End ratio, significantly reducing the loan amount you qualify for.
Factors That Impact Your Purchasing Power
Several variables can drastically change the results above:
Interest Rates: A 1% increase in interest rates can reduce your buying power by approximately 10-11%.
Property Taxes: High-tax areas reduce the amount of monthly cash available for the mortgage principal, lowering the loan amount you can afford.
Down Payment: A larger down payment not only increases your max price dollar-for-dollar but also lowers your Loan-to-Value (LTV) ratio, potentially securing better interest rates.
Loan Term: Opting for a 15-year mortgage increases monthly payments compared to a 30-year mortgage, which might lower the total loan amount you qualify for based on monthly cash flow, even though you save significantly on interest long-term.
How to Increase Your Affordability
If the result from the Mortgage Affordability Calculator is lower than the home prices in your target area, consider these strategies:
Pay down consumer debt: Eliminating a $400 monthly car payment can increase your mortgage borrowing power by roughly $50,000 to $60,000 (depending on current rates).
Improve your credit score: A higher score can qualify you for a lower interest rate.
Save for a larger down payment: This directly increases your max home price.