Please enter valid positive numbers for Income, Down Payment, and Interest Rate.
Maximum Home Price
$0
Max Monthly Mortgage Payment (P&I):$0
Estimated Monthly Taxes & Insurance:$0
Total Monthly Housing Payment:$0
Based on Front-End Ratio (28%):$0/mo
Based on Back-End Ratio (36%):$0/mo
How Much House Can You Really Afford?
Buying a home is likely the largest financial decision you will make in your lifetime. While getting pre-approved by a lender is the ultimate way to know your budget, using a Mortgage Affordability Calculator helps you estimate your price range before you start house hunting. This prevents the heartbreak of falling in love with a property that is outside your financial reach.
Understanding the Calculation Logic
This calculator determines your buying power based on standard lender guidelines, often referred to as the 28/36 Rule. Lenders look at two main ratios to determine risk:
Front-End Ratio (28%): This rule suggests that your monthly housing costs (principal, interest, property taxes, homeowner's insurance, and HOA fees) should not exceed 28% of your gross monthly income (income before taxes).
Back-End Ratio (36%): This rule suggests that your total monthly debt payments (housing costs plus student loans, car payments, credit cards, etc.) should not exceed 36% of your gross monthly income.
The calculator computes both limits and uses the lower of the two to ensure you remain financially secure. It then works backward from that monthly payment, factoring in your down payment and current interest rates, to find the maximum home price you can afford.
Key Factors That Impact Affordability
Several variables can significantly change your purchasing power:
1. Interest Rates
Even a small increase in interest rates can drastically reduce the loan amount you qualify for. For example, a 1% increase in rates might reduce your buying power by 10-15%, keeping the monthly payment the same.
2. Monthly Debts
High monthly obligations like car loans or credit card minimums eat directly into your affordability. Paying off a $400/month car loan could theoretically increase your mortgage qualification amount by roughly $50,000 to $70,000, depending on rates.
3. Down Payment
A larger down payment reduces the loan amount required, lowering your monthly payments and potentially allowing you to buy a more expensive home. Additionally, putting down 20% or more typically removes the need for Private Mortgage Insurance (PMI), saving you money monthly.
Hidden Costs to Consider
Remember that the "sticker price" of the home isn't your only expense. When budgeting, ensure you have funds set aside for:
Closing Costs: typically 2-5% of the loan amount.
Maintenance: It is often recommended to budget 1% of the home value annually for repairs.
Utilities: larger homes often come with higher heating and cooling bills.
function calculateAffordability() {
// 1. Get Input Values
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value) || 0;
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTerm").value);
var propertyTaxYearly = parseFloat(document.getElementById("propertyTax").value) || 0;
var homeInsuranceYearly = parseFloat(document.getElementById("homeInsurance").value) || 0;
var hoaFeesMonthly = parseFloat(document.getElementById("hoaFees").value) || 0;
// 2. Validation
var errorDiv = document.getElementById("errorMsg");
var resultDiv = document.getElementById("resultArea");
if (isNaN(annualIncome) || annualIncome <= 0 || isNaN(downPayment) || downPayment < 0 || isNaN(interestRate) || interestRate <= 0) {
errorDiv.style.display = "block";
resultDiv.style.display = "none";
return;
}
errorDiv.style.display = "none";
// 3. Calculation Logic
var monthlyGrossIncome = annualIncome / 12;
var monthlyTaxAndIns = (propertyTaxYearly / 12) + (homeInsuranceYearly / 12) + hoaFeesMonthly;
// Rule 1: Front-End Ratio (Housing expenses <= 28% of gross income)
var maxHousingPaymentFront = monthlyGrossIncome * 0.28;
// Rule 2: Back-End Ratio (Total debt 0) {
// Mortgage Formula: P = L[c(1 + c)^n]/[(1 + c)^n – 1]
// Inverse to find L: L = P * [((1 + c)^n – 1) / (c(1 + c)^n)]
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
var mathFactor = Math.pow(1 + monthlyRate, numberOfPayments);
maxLoanAmount = maxAvailableForPI * ((mathFactor – 1) / (monthlyRate * mathFactor));
} else {
maxLoanAmount = 0;
maxAvailableForPI = 0;
maxAffordableTotalMonthly = monthlyTaxAndIns; // They still have to pay fees if they buy a $0 house (theoretical)
}
var maxHomePrice = maxLoanAmount + downPayment;
// 4. Update UI
// Format Currency Function
var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 });
document.getElementById("maxHomePrice").innerText = fmt.format(maxHomePrice);
document.getElementById("maxPI").innerText = fmt.format(maxAvailableForPI);
document.getElementById("estEscrow").innerText = fmt.format(monthlyTaxAndIns);
document.getElementById("totalMonthly").innerText = fmt.format(maxAvailableForPI + monthlyTaxAndIns);
document.getElementById("frontEndLimit").innerText = fmt.format(maxHousingPaymentFront) + " /mo limit";
document.getElementById("backEndLimit").innerText = fmt.format(maxHousingPaymentBack) + " /mo limit";
resultDiv.style.display = "block";
}