House Affordability Calculator

by
House Affordability Calculator
Conservative (28% Front / 36% Back)Moderate (31% Front / 43% Back)Aggressive (33% Front / 50% Back)
Result:
Maximum Home Price:
$ 0.00
Monthly Gross Income: $ 0
Max Monthly PITI: $ 0
Est. Loan Amount: $ 0
function calculateAffordability(){var annualIncome=parseFloat(document.getElementById('gross_income').value);var monthlyDebt=parseFloat(document.getElementById('monthly_debt').value);var downPayment=parseFloat(document.getElementById('down_payment').value);var interestRate=parseFloat(document.getElementById('interest_rate').value);var loanTerm=parseFloat(document.getElementById('loan_term').value);var profile=document.getElementById('calc_profile').value;if(isNaN(annualIncome)||isNaN(monthlyDebt)||isNaN(downPayment)||isNaN(interestRate)||isNaN(loanTerm)){alert('Please enter valid numeric values');return;}var frontRatio,backRatio;if(profile==='conservative'){frontRatio=0.28;backRatio=0.36;}else if(profile==='aggressive'){frontRatio=0.33;backRatio=0.50;}else{frontRatio=0.31;backRatio=0.43;}var monthlyGross=annualIncome/12;var maxFront=monthlyGross*frontRatio;var maxBack=(monthlyGross*backRatio)-monthlyDebt;var maxPITI=Math.min(maxFront,maxBack);var estTaxesIns=maxPITI*0.25;var maxPI=maxPITI-estTaxesIns;var monthlyRate=(interestRate/100)/12;var numPayments=loanTerm*12;var loanAmount=maxPI*((Math.pow(1+monthlyRate,numPayments)-1)/(monthlyRate*Math.pow(1+monthlyRate,numPayments)));if(loanAmount<0)loanAmount=0;var homePrice=loanAmount+downPayment;document.getElementById('maxHomePrice').innerHTML=homePrice.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2});document.getElementById('resMonthlyIncome').innerHTML=monthlyGross.toFixed(2);document.getElementById('resMaxPayment').innerHTML=maxPITI.toFixed(2);document.getElementById('resLoanAmt').innerHTML=loanAmount.toLocaleString(undefined,{maximumFractionDigits:0});if(document.getElementById('steps').checked){document.getElementById('detailsArea').style.display='block';}else{document.getElementById('detailsArea').style.display='none';}}

How to Use the House Affordability Calculator

The house affordability calculator is a powerful tool designed to help prospective homebuyers understand how much house they can actually afford based on their unique financial situation. Instead of looking only at the sale price, this calculator considers your income, existing debts, and the current interest rate environment to give you a realistic purchase target.

Annual Gross Income
Your total income before taxes and other deductions. This is the starting point for lenders when calculating your debt-to-income (DTI) ratio.
Monthly Debt Payments
The total of your recurring monthly debt obligations, such as car loans, student loans, and credit card minimum payments. Do not include current rent or utilities.
Down Payment
The cash amount you plan to pay upfront. This amount is added to your calculated loan capacity to determine the final home purchase price.
Interest Rate (APR)
The annual percentage rate for your mortgage. Even a small 0.5% change in this rate can significantly impact your buying power.

How House Affordability is Calculated

Lenders use two primary "Debt-to-Income" (DTI) ratios to determine how much they are willing to lend you. Our house affordability calculator applies these same industry standards to your inputs:

Max Monthly Payment = Min((Gross Monthly Income × Front Ratio), (Gross Monthly Income × Back Ratio – Monthly Debts))

  • Front-End Ratio: The percentage of your gross income that goes toward housing costs (Principal, Interest, Taxes, and Insurance). Standard is 28-31%.
  • Back-End Ratio: The percentage of your gross income that goes toward ALL debts, including the new mortgage. Standard is 36-43%.
  • Loan Amortization: Once the "allowable" monthly payment is found, the calculator uses the interest rate and term to "reverse engineer" the total loan amount.

Calculation Example

Example: A couple earns $100,000 per year with $500 in monthly car payments. They have $40,000 saved for a down payment and the current rate is 6.5% for a 30-year term.

Step-by-step solution:

  1. Monthly Gross Income = $100,000 / 12 = $8,333.33
  2. Moderate Front Ratio (31%) = $2,583.33 max housing payment.
  3. Moderate Back Ratio (43%) = ($8,333.33 * 0.43) – $500 = $3,083.33.
  4. The lower value ($2,583.33) is used. After subtracting estimated taxes/insurance (~$645), the available Principal & Interest is $1,938.
  5. Using the mortgage formula at 6.5%, this payment supports a loan of approximately $306,650.
  6. Max Home Price = $306,650 (Loan) + $40,000 (Down Payment) = $346,650.

Common Questions

What is the "28/36 Rule"?

The 28/36 rule is a classic benchmark for home affordability. it suggests that you should spend no more than 28% of your gross monthly income on housing expenses and no more than 36% on total debt. This is represented by our "Conservative" profile setting.

How does debt affect my house affordability?

Existing debt reduces your "Back-End Ratio" capacity. For every dollar you pay toward a car or student loan, that is one less dollar available for a mortgage payment. Reducing high-interest debt is often the fastest way to increase your house affordability.

Should I use my gross or net income?

Lenders always use gross income (pre-tax) for their official house affordability calculator formulas. However, for your personal budget, it is wise to also check how the monthly payment fits into your net (take-home) pay to ensure you aren't "house poor."

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