Home Mortgage Calculator

by

Home Affordability Calculator

30 Years 20 Years 15 Years 10 Years

Estimated Home Price

$0

Based on your income and a 36% Debt-to-Income (DTI) ratio.

Max Loan Amount $0
Monthly P&I Payment $0
Total Monthly Budget $0
function calculateAffordability() { var income = parseFloat(document.getElementById('annualIncome').value); var monthlyDebt = parseFloat(document.getElementById('monthlyDebt').value) || 0; var downPayment = parseFloat(document.getElementById('downPayment').value) || 0; var annualRate = parseFloat(document.getElementById('interestRate').value) / 100; var years = parseFloat(document.getElementById('loanTerm').value); var monthlyTaxIns = parseFloat(document.getElementById('taxInsurance').value) || 0; if (isNaN(income) || income <= 0) { alert("Please enter a valid annual income."); return; } var monthlyGrossIncome = income / 12; var dtiLimit = 0.36; // 36% standard DTI rule // Total allowable monthly debt payment (housing + existing debts) var totalAllowableMonthlyDebt = monthlyGrossIncome * dtiLimit; // Subtract existing monthly debt to find the max available for housing (PITI) var maxHousingPayment = totalAllowableMonthlyDebt – monthlyDebt; // Subtract property taxes and insurance to find max Principal and Interest (P&I) var maxPIPayment = maxHousingPayment – monthlyTaxIns; if (maxPIPayment <= 0) { document.getElementById('totalPriceDisplay').innerHTML = "Ineligible"; document.getElementById('totalPriceDisplay').style.color = "#c53030"; document.getElementById('affordabilityResult').style.display = "block"; document.getElementById('loanAmountDisplay').innerHTML = "$0"; document.getElementById('monthlyPaymentDisplay').innerHTML = "$0"; document.getElementById('totalBudgetDisplay').innerHTML = "N/A"; return; } var monthlyRate = annualRate / 12; var numberOfPayments = years * 12; // Formula for loan amount: L = P * [ (1+r)^n – 1 ] / [ r(1+r)^n ] var loanAmount = maxPIPayment * (Math.pow(1 + monthlyRate, numberOfPayments) – 1) / (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)); var totalHomePrice = loanAmount + downPayment; // Formatting var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 }); document.getElementById('totalPriceDisplay').style.color = "#2f855a"; document.getElementById('totalPriceDisplay').innerHTML = formatter.format(totalHomePrice); document.getElementById('loanAmountDisplay').innerHTML = formatter.format(loanAmount); document.getElementById('monthlyPaymentDisplay').innerHTML = formatter.format(maxPIPayment); document.getElementById('totalBudgetDisplay').innerHTML = formatter.format(maxHousingPayment); document.getElementById('affordabilityResult').style.display = "block"; }

How Much House Can You Actually Afford?

Determining your home buying budget involves more than just looking at the sticker price. Lenders use specific ratios to determine how much they are willing to lend you. The primary metric used is the Debt-to-Income (DTI) ratio.

The 28/36 Rule

Most financial experts and lenders follow the "28/36 rule":

  • 28%: Your mortgage payment (including taxes and insurance) should not exceed 28% of your gross monthly income.
  • 36%: Your total debt payments (mortgage, car loans, student loans, and credit cards) should not exceed 36% of your gross monthly income.

Example Calculation

If you earn $75,000 per year, your gross monthly income is $6,250.

Using the 36% rule: $6,250 x 0.36 = $2,250 total allowable monthly debt.
If you have a $400 car payment, you are left with $1,850 for your monthly mortgage, taxes, and insurance. If your taxes and insurance cost $450, your maximum monthly principal and interest payment is $1,400.

Factors That Impact Affordability

  1. Interest Rates: Even a 1% shift in interest rates can change your purchasing power by tens of thousands of dollars.
  2. Down Payment: A larger down payment reduces your loan-to-value ratio, potentially eliminating the need for Private Mortgage Insurance (PMI).
  3. Credit Score: Higher scores qualify for lower interest rates, directly increasing the loan amount you can afford for the same monthly payment.
  4. Local Property Taxes: High-tax areas reduce the amount of money available for the actual loan principal.
Expert Tip: While a calculator provides a mathematical limit, it doesn't account for your lifestyle expenses like travel, hobbies, or childcare. Always build a "buffer" into your budget to ensure you aren't "house poor."

Leave a Comment