How Much House Can I Afford?
Determining your homebuying power is the crucial first step in the real estate journey. This Mortgage Affordability Calculator helps estimate the maximum home price you can handle comfortably, based on your current income, existing debts, and available down payment.
Lenders primarily look at your Debt-to-Income (DTI) ratio to decide how much they are willing to lend. A common guideline is the "28/36 rule," suggesting your household expenses shouldn't exceed 28% of your gross monthly income, and your total debt (including the new mortgage) shouldn't exceed 36%. This calculator uses a conservative estimate based on these standard lender practices to give you a realistic figure.
Affordability Calculator
Exclude rent/current mortgage.
30 Years
20 Years
15 Years
Your Estimated Buying Power
Maximum Home Price:
Estimated Max Loan Amount:
Estimated Monthly Payment (P&I only):
*Note: This estimate assumes approximately 20% of your housing budget goes toward taxes and insurance. Actual affordability will vary based on local tax rates and HOA fees.Understanding the Factors Affecting Affordability
When calculating how much house you can afford, several key factors come into play beyond just the sticker price of the home:
- Income vs. Debt (DTI): Lenders want to ensure you aren't overleveraged. For example, if you earn $75,000 annually ($6,250 monthly) and have $500 in car payments and student loans, lenders will calculate how much additional mortgage debt you can take on without exceeding their back-end DTI limits (often around 36% to 43%).
- The Down Payment: The more money you put down upfront, the less you need to borrow. A larger down payment increases your potential maximum home price and can also help you avoid Private Mortgage Insurance (PMI).
- Interest Rates: Even small changes in interest rates significantly impact affordability. On a $400,000 loan, the difference between a 6% and a 7% rate can change the monthly payment by nearly $270, drastically altering how much total loan you qualify for.
- Loan Term: A 30-year term lowers monthly payments compared to a 15-year term, theoretically allowing you to borrow a larger amount, though you will pay significantly more interest over the life of the loan.
Use the calculator above to experiment with different scenarios. See how increasing your down payment or securing a lower interest rate can expand your homebuying options.
function calculateAffordability() { // Get input values var annualIncome = parseFloat(document.getElementById('maAnnualIncome').value); var monthlyDebt = parseFloat(document.getElementById('maMonthlyDebt').value); var downPayment = parseFloat(document.getElementById('maDownPayment').value); var interestRate = parseFloat(document.getElementById('maInterestRate').value); var loanYears = parseInt(document.getElementById('maLoanTerm').value); var resultContainer = document.getElementById('maResultContainer'); // Validate inputs if (isNaN(annualIncome) || annualIncome <= 0 || isNaN(interestRate) || isNaN(loanYears)) { alert("Please enter valid income, interest rate, and loan term values."); resultContainer.style.display = "none"; return; } // Set defaults for optional inputs if empty if (isNaN(monthlyDebt)) monthlyDebt = 0; if (isNaN(downPayment)) downPayment = 0; // — CALCULATION LOGIC — // 1. Define Lender Criteria Constants // Using a conservative back-end DTI cap of 36% for robust affordability. var maxBackEndDTI = 0.36; // Assumption: Taxes & Insurance will take up roughly 20% of the total housing payment capacity. // Therefore, P&I capacity is roughly 80% of total housing capacity. var piPortionFactor = 0.80; // 2. Calculate Monthly Gross Income var monthlyGrossIncome = annualIncome / 12; // 3. Calculate Maximum Total Allowable Monthly Debt Payment var maxTotalMonthlyAllowed = monthlyGrossIncome * maxBackEndDTI; // 4. Calculate Maximum Available for Housing (PITI – Principal, Interest, Taxes, Insurance) // This is total allowed minus existing non-mortgage debts. var maxAvailableForHousing = maxTotalMonthlyAllowed – monthlyDebt; // Check if they have enough income to afford any house if (maxAvailableForHousing <= 0) { document.getElementById('maMaxPriceResult').innerText = "$0"; document.getElementById('maMaxLoanResult').innerText = "$0"; document.getElementById('maMonthlyPIResult').innerText = "$0"; resultContainer.style.display = "block"; return; } // 5. Estimate Maximum Payment allocated specifically for Principal & Interest (P&I) var maxMonthlyPI = maxAvailableForHousing * piPortionFactor; // 6. Calculate Max Loan Amount based on Max P&I // Working backwards from the standard mortgage formula: P = L[r(1+r)^n]/[(1+r)^n – 1] // To find L (Loan Amount): L = P / ( [r(1+r)^n]/[(1+r)^n – 1] ) var monthlyRate = (interestRate / 100) / 12; var totalPayments = loanYears * 12; // Handle zero interest rate edge case (unlikely but mathematically possible) var maxLoanAmount = 0; if (monthlyRate === 0) { maxLoanAmount = maxMonthlyPI * totalPayments; } else { var discountFactor = (Math.pow(1 + monthlyRate, totalPayments) – 1) / (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)); maxLoanAmount = maxMonthlyPI * discountFactor; } // 7. Calculate Maximum Home Price var maxHomePrice = maxLoanAmount + downPayment; // — DISPLAY RESULTS — var currencyFormatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', minimumFractionDigits: 0, maximumFractionDigits: 0, }); document.getElementById('maMaxPriceResult').innerText = currencyFormatter.format(maxHomePrice); document.getElementById('maMaxLoanResult').innerText = currencyFormatter.format(maxLoanAmount); // For monthly payment, we show two decimals document.getElementById('maMonthlyPIResult').innerText = maxMonthlyPI.toLocaleString('en-US', { style: 'currency', currency: 'USD' }); resultContainer.style.display = "block"; }