function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebts = parseFloat(document.getElementById("monthlyDebts").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTerm").value);
var dtiRatio = parseFloat(document.getElementById("dtiRatio").value);
if (isNaN(annualIncome) || isNaN(monthlyDebts) || isNaN(downPayment) || isNaN(interestRate) || isNaN(dtiRatio)) {
alert("Please enter valid numeric values in all fields.");
return;
}
var monthlyGrossIncome = annualIncome / 12;
var maxAllowedMonthlyDebtTotal = monthlyGrossIncome * (dtiRatio / 100);
var maxMonthlyPITI = maxAllowedMonthlyDebtTotal – monthlyDebts;
if (maxMonthlyPITI <= 0) {
document.getElementById("mortgage-result").style.display = "block";
document.getElementById("maxPriceDisplay").innerHTML = "$0";
document.getElementById("resultDetails").innerHTML = "Based on your current income and debts, your monthly debt-to-income ratio is already above the target. You may need to reduce debts or increase income to qualify for a mortgage.";
return;
}
var monthlyRate = (interestRate / 100) / 12;
var totalMonths = loanTermYears * 12;
var loanAmount = maxMonthlyPITI * (1 – Math.pow(1 + monthlyRate, -totalMonths)) / monthlyRate;
var totalHomePrice = loanAmount + downPayment;
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
maximumFractionDigits: 0
});
document.getElementById("mortgage-result").style.display = "block";
document.getElementById("maxPriceDisplay").innerHTML = formatter.format(totalHomePrice);
var detailHtml = "Maximum Monthly Payment (P&I): " + formatter.format(maxMonthlyPITI) + "";
detailHtml += "Estimated Loan Amount: " + formatter.format(loanAmount) + "";
detailHtml += "Down Payment: " + formatter.format(downPayment) + "";
detailHtml += "Note: This estimate assumes the entire monthly allowance goes toward Principal and Interest. It does not include property taxes, homeowners insurance, or HOA fees, which will reduce your actual buying power.";
document.getElementById("resultDetails").innerHTML = detailHtml;
}
Mortgage Affordability Calculator: How Much House Can You Afford?
Finding your dream home starts with a realistic budget. Before you start browsing listings, it is essential to understand how much a lender might be willing to lend you. Our Mortgage Affordability Calculator helps you estimate your home buying power based on financial industry standards.
How Home Affordability is Calculated
Lenders primarily use the Debt-to-Income (DTI) ratio to determine your eligibility. This ratio compares your total monthly debt obligations to your gross monthly income. Most conventional lenders prefer a DTI ratio below 36%, although some programs allow for higher ratios depending on your credit score and down payment size.
The 28/36 Rule
A common benchmark in the real estate industry is the 28/36 rule:
28% Front-End Ratio: Your monthly housing expenses (mortgage, taxes, insurance) should not exceed 28% of your gross monthly income.
36% Back-End Ratio: Your total debt payments (including the new mortgage, car loans, student loans, and credit cards) should not exceed 36% of your gross monthly income.
Factors Impacting Your Buying Power
Several variables influence the final price tag you can manage:
Interest Rates: Even a 1% difference in interest rates can change your buying power by tens of thousands of dollars. Lower rates allow more of your monthly payment to go toward the principal balance.
Down Payment: The more money you put down upfront, the lower your loan-to-value (LTV) ratio. A down payment of 20% or more typically allows you to avoid Private Mortgage Insurance (PMI), saving you hundreds per month.
Loan Term: A 30-year mortgage offers lower monthly payments but higher total interest costs. A 15-year mortgage builds equity faster but requires a higher monthly income to qualify.
Existing Debts: High monthly payments for car loans or student debt directly subtract from the amount you can put toward a mortgage.
Example Calculation
If you earn $85,000 per year, your gross monthly income is approximately $7,083. Using a 36% DTI limit, your total allowed monthly debt is $2,550. If you already pay $400 monthly for a car loan, you have $2,150 remaining for your mortgage payment.
With a 6.5% interest rate on a 30-year term and a $20,000 down payment, this results in a maximum home price of approximately $360,000 (excluding taxes and insurance).
Tips to Increase Your Mortgage Budget
If the results from the calculator are lower than expected, consider these strategies:
Pay Down Debt: Reducing your recurring monthly payments (like credit cards or car loans) significantly boosts your DTI ratio.
Improve Your Credit Score: A higher credit score qualifies you for lower interest rates, which lowers your monthly payment for the same loan amount.
Save a Larger Down Payment: This directly increases your home price capacity without increasing your monthly loan obligation.