Determine how much house you can afford based on your income and debts.
Your total yearly income before taxes.
Car loans, student loans, credit cards (min payment).
Cash available for upfront payment.
Estimated mortgage interest rate.
15 Years
30 Years
Annual cost as % of home value (approx).
Please enter valid positive numbers for Income and Interest Rate.
Maximum Home Price$0.00
Total Monthly Payment$0.00
Principal & Interest$0.00
Est. Taxes & Insurance$0.00
Loan Amount$0.00
Understanding Your Mortgage Affordability
Buying a home is one of the most significant financial decisions you will make. Our Mortgage Affordability Calculator helps you estimate the maximum home price you can afford by analyzing your gross annual income, monthly debts, and down payment. Unlike simple loan calculators, this tool considers the Debt-to-Income (DTI) ratios used by lenders to approve mortgages.
How is Mortgage Affordability Calculated?
Lenders primarily use two ratios to determine how much money they are willing to lend you. Understanding these ratios is key to knowing your budget:
Front-End Ratio (28% Rule): This rule states that your monthly housing costs (principal, interest, property taxes, and insurance) should not exceed 28% of your gross monthly income.
Back-End Ratio (36% Rule): This rule looks at your total monthly debt load. Your housing costs plus all other monthly debts (student loans, car payments, credit cards) should not exceed 36% of your gross monthly income. Some loan programs allow this to go higher (up to 43% or 50%), but 36% is a conservative standard for affordability.
Expert Tip: While a lender may approve you for a higher amount based on gross income, it is often wise to stick to a budget that feels comfortable with your net (take-home) income to ensure you have funds for maintenance and savings.
Key Factors That Affect Your Buying Power
Several variables in the calculator significantly impact the final home price you can afford:
1. Interest Rates
Even a small change in interest rates can drastically alter your purchasing power. A higher rate increases your monthly mortgage payment, which reduces the loan amount you qualify for under the DTI limits.
2. Monthly Debts
Existing debts reduce the amount of income available for a mortgage. Paying off a car loan or reducing credit card balances before applying for a mortgage can often increase your affordable home price by tens of thousands of dollars.
3. Down Payment
A larger down payment reduces the loan amount required for a specific home price. It also provides immediate equity and can eliminate the need for Private Mortgage Insurance (PMI) if you put down at least 20%.
Improving Your Affordability
If the result from the calculator is lower than home prices in your target area, consider these strategies:
Reduce Debt: Aggressively pay down high-interest consumer debt to lower your monthly obligations.
Save for a Larger Down Payment: This lowers the principal loan amount and monthly payments.
Improve Credit Score: A better credit score can qualify you for lower interest rates, significantly boosting your buying power.
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) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTermYears = parseInt(document.getElementById('loanTerm').value);
var taxInsRate = parseFloat(document.getElementById('taxRate').value) || 0;
// 2. Validation
var errorDiv = document.getElementById('errorMessage');
var resultDiv = document.getElementById('affordabilityResult');
if (isNaN(annualIncome) || annualIncome <= 0 || isNaN(interestRate) || interestRate < 0) {
errorDiv.style.display = 'block';
resultDiv.style.display = 'none';
return;
}
errorDiv.style.display = 'none';
// 3. Constants and Rate Conversions
var grossMonthlyIncome = annualIncome / 12;
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
var taxInsMonthlyRate = (taxInsRate / 100) / 12; // Monthly Tax/Ins as percentage of Home Price
// 4. Calculate Max Allowable Monthly Payment based on DTI Ratios
// Front-end ratio (Housing only): usually 28% of gross income
var maxHousingPaymentFront = grossMonthlyIncome * 0.28;
// Back-end ratio (Total Debt): usually 36% of gross income
// Max Housing = (Income * 0.36) – Existing Monthly Debts
var maxHousingPaymentBack = (grossMonthlyIncome * 0.36) – monthlyDebt;
// The limiting factor is the lower of the two
var maxTotalMonthlyPayment = Math.min(maxHousingPaymentFront, maxHousingPaymentBack);
if (maxTotalMonthlyPayment <= 0) {
// User has too much debt to afford a house based on these ratios
document.getElementById('resHomePrice').innerText = "$0.00";
document.getElementById('resMonthlyPayment').innerText = "$0.00";
document.getElementById('resPrincipalInterest').innerText = "$0.00";
document.getElementById('resTaxIns').innerText = "$0.00";
document.getElementById('resLoanAmount').innerText = "$0.00";
resultDiv.style.display = 'block';
return;
}
// 5. Solve for Home Price
// Formula: MaxTotalPayment = (LoanAmount * MortgageFactor) + (HomePrice * TaxInsMonthlyRate)
// Where LoanAmount = HomePrice – DownPayment
// Therefore: MaxTotalPayment = ((HomePrice – DownPayment) * MortgageFactor) + (HomePrice * TaxInsMonthlyRate)
//
// var M = MortgageFactor
// var T = TaxInsMonthlyRate
// MaxTotalPayment = (HomePrice * M) – (DownPayment * M) + (HomePrice * T)
// MaxTotalPayment + (DownPayment * M) = HomePrice * (M + T)
// HomePrice = (MaxTotalPayment + (DownPayment * M)) / (M + T)
var mortgageFactor = 0;
if (monthlyInterestRate === 0) {
mortgageFactor = 1 / numberOfPayments;
} else {
mortgageFactor = (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
}
var homePrice = (maxTotalMonthlyPayment + (downPayment * mortgageFactor)) / (mortgageFactor + taxInsMonthlyRate);
// Edge case: if down payment is greater than home price logic (unlikely with this formula but possible math artifact)
if (homePrice < downPayment) {
homePrice = downPayment; // You can afford what you can pay in cash
}
// 6. Calculate breakdown components based on the derived Home Price
var loanAmount = homePrice – downPayment;
if (loanAmount < 0) loanAmount = 0;
var monthlyPrincipalInterest = loanAmount * mortgageFactor;
var monthlyTaxIns = homePrice * taxInsMonthlyRate;
var totalMonthlyCheck = monthlyPrincipalInterest + monthlyTaxIns;
// 7. Format Output
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
document.getElementById('resHomePrice').innerText = formatter.format(homePrice);
document.getElementById('resMonthlyPayment').innerText = formatter.format(totalMonthlyCheck);
document.getElementById('resPrincipalInterest').innerText = formatter.format(monthlyPrincipalInterest);
document.getElementById('resTaxIns').innerText = formatter.format(monthlyTaxIns);
document.getElementById('resLoanAmount').innerText = formatter.format(loanAmount);
// Show result
resultDiv.style.display = 'block';
}