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Mortgage Affordability Calculator

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

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Please check your inputs. All fields must contain positive numbers.

Maximum Home Price

$0
Maximum Loan Amount: $0
Max Monthly Payment (P&I + Taxes): $0
Limiting Factor: –

*This calculation uses the 28/36 qualifying rule standard in the mortgage industry.

Understanding Your Mortgage Affordability

Buying a home is one of the largest financial commitments you will make. Before you start touring open houses, it is crucial to understand exactly how much you can afford to borrow. Our Mortgage Affordability Calculator uses the standard "debt-to-income" (DTI) ratios utilized by lenders to estimate your purchasing power.

The 28/36 Rule Explained

Lenders generally use two specific ratios to determine if you qualify for a mortgage. To give you a realistic estimate, this calculator applies the 28/36 rule:

  • Front-End Ratio (28%): Your 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 plus car loans, student loans, credit cards, etc.) should not exceed 36% of your gross monthly income.

The calculator determines the maximum monthly payment allowed under both scenarios and uses the lower number to ensure you remain within safe lending limits.

Key Factors That Impact How Much House You Can Buy

Several variables can significantly swing your affordability number:

  1. Interest Rates: A higher interest rate increases your monthly payment, which reduces the total loan amount you can afford for the same monthly budget.
  2. Existing Debt: If you have high monthly obligations (like a large car payment), your back-end ratio will limit your borrowing power, even if your income is high.
  3. Down Payment: A larger down payment directly increases your maximum home price dollar-for-dollar and lowers your Loan-to-Value (LTV) ratio.
  4. Taxes and Insurance: High property taxes or homeowners insurance premiums eat into your monthly housing budget, leaving less room for the mortgage principal and interest.

Why Use a Mortgage Affordability Calculator?

While pre-approval from a lender is the ultimate authority, an affordability calculator is an essential planning tool. It helps you set realistic expectations, plan your down payment savings strategy, and identify if you need to pay down existing debts before applying for a loan. By understanding the math behind the approval process, you can approach your home search with confidence and financial clarity.

function calculateAffordability() { // 1. Get DOM elements var incomeInput = document.getElementById("annualIncome"); var debtsInput = document.getElementById("monthlyDebts"); var downPaymentInput = document.getElementById("downPayment"); var rateInput = document.getElementById("interestRate"); var termInput = document.getElementById("loanTerm"); var taxInput = document.getElementById("monthlyTaxInsurance"); var resultBox = document.getElementById("resultBox"); var errorDisplay = document.getElementById("errorDisplay"); var maxHomePriceDisplay = document.getElementById("maxHomePrice"); var maxLoanAmountDisplay = document.getElementById("maxLoanAmount"); var maxMonthlyPaymentDisplay = document.getElementById("maxMonthlyPayment"); var limitingFactorDisplay = document.getElementById("limitingFactor"); // 2. Parse values var annualIncome = parseFloat(incomeInput.value); var monthlyDebts = parseFloat(debtsInput.value); var downPayment = parseFloat(downPaymentInput.value); var interestRate = parseFloat(rateInput.value); var years = parseFloat(termInput.value); var monthlyTaxIns = parseFloat(taxInput.value); // 3. Validation if (isNaN(annualIncome) || annualIncome <= 0 || isNaN(interestRate) || interestRate < 0 || isNaN(years) || years <= 0) { errorDisplay.style.display = "block"; resultBox.style.display = "none"; return; } // Handle optional fields defaulting to 0 if empty/NaN if (isNaN(monthlyDebts)) monthlyDebts = 0; if (isNaN(downPayment)) downPayment = 0; if (isNaN(monthlyTaxIns)) monthlyTaxIns = 0; errorDisplay.style.display = "none"; // 4. Logic Implementation var monthlyGrossIncome = annualIncome / 12; // Front-End Ratio Limit (28% of Income) // This limit covers P&I + Taxes + Insurance var maxPaymentFrontEnd = monthlyGrossIncome * 0.28; // Back-End Ratio Limit (36% of Income – Debts) // This limit covers P&I + Taxes + Insurance var maxPaymentBackEnd = (monthlyGrossIncome * 0.36) – monthlyDebts; // Determine which ratio is the limiting factor var maxTotalHousingPayment = 0; var limitReason = ""; if (maxPaymentBackEnd < maxPaymentFrontEnd) { maxTotalHousingPayment = maxPaymentBackEnd; limitReason = "Back-End Ratio (High Debts)"; } else { maxTotalHousingPayment = maxPaymentFrontEnd; limitReason = "Front-End Ratio (Income Limit)"; } // Ensure payment isn't negative if (maxTotalHousingPayment <= 0) { resultBox.style.display = "block"; maxHomePriceDisplay.innerHTML = "$0"; maxLoanAmountDisplay.innerHTML = "$0"; maxMonthlyPaymentDisplay.innerHTML = "$0"; limitingFactorDisplay.innerHTML = "Debt exceeds allowable limits"; return; } // Calculate Max P&I (Principal & Interest) available // Total Payment = P&I + Taxes/Ins // So P&I = Total Payment – Taxes/Ins var maxPrincipalAndInterest = maxTotalHousingPayment – monthlyTaxIns; // If taxes/insurance eat up the whole budget if (maxPrincipalAndInterest <= 0) { resultBox.style.display = "block"; maxHomePriceDisplay.innerHTML = "$0"; maxLoanAmountDisplay.innerHTML = "$0"; maxMonthlyPaymentDisplay.innerHTML = formatCurrency(maxTotalHousingPayment); limitingFactorDisplay.innerHTML = "Taxes/Insurance exceed budget"; return; } // Calculate Max Loan Amount based on Max P&I // Formula: PV = PMT * [ (1 – (1+r)^-n) / r ] var monthlyRate = (interestRate / 100) / 12; var numberOfPayments = years * 12; var maxLoan = 0; if (monthlyRate === 0) { maxLoan = maxPrincipalAndInterest * numberOfPayments; } else { maxLoan = maxPrincipalAndInterest * ( (1 – Math.pow(1 + monthlyRate, -numberOfPayments)) / monthlyRate ); } var maxHomePrice = maxLoan + downPayment; // 5. Update UI resultBox.style.display = "block"; maxHomePriceDisplay.innerHTML = formatCurrency(maxHomePrice); maxLoanAmountDisplay.innerHTML = formatCurrency(maxLoan); maxMonthlyPaymentDisplay.innerHTML = formatCurrency(maxTotalHousingPayment); limitingFactorDisplay.innerHTML = limitReason; } function formatCurrency(num) { return "$" + num.toFixed(0).replace(/\B(?=(\d{3})+(?!\d))/g, ","); }

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