Find out how much house you can afford based on your income and debt.
30 Years Fixed
20 Years Fixed
15 Years Fixed
10 Years Fixed
Estimated Purchase Price: $0
Total Monthly Payment (P&I):$0
Monthly Property Tax/Ins:$0
Loan Amount:$0
Debt-to-Income Ratio:36% (Conservative)
How Is Home Affordability Calculated?
Lenders typically use the 28/36 rule to determine how much you can borrow. This rule suggests that your mortgage payment should not exceed 28% of your gross monthly income, and your total debt payments (including the new mortgage) should not exceed 36%. While some loan programs allow for higher ratios (up to 43% or even 50% for FHA), staying near 36% ensures financial stability.
Key Factors Affecting Your Buying Power
Gross Annual Income: This is your total income before taxes. It is the primary driver of your loan eligibility.
Debt-to-Income (DTI) Ratio: Lenders look at your existing monthly obligations (car loans, student loans, credit cards) to see how much room is left for a mortgage.
Down Payment: The more you put down, the lower your loan-to-value ratio, which can eliminate the need for Private Mortgage Insurance (PMI).
Interest Rates: Even a 1% change in interest rates can shift your buying power by tens of thousands of dollars.
Example: Home Affordability in Practice
Let's look at a realistic scenario for a couple earning $100,000 per year:
Monthly Gross Income: $8,333
Max Total Monthly Debt (36%): $3,000
Current Car/Student Loans: $500
Available for Mortgage: $2,500 (Including taxes and insurance)
With a 6.5% interest rate and a $50,000 down payment, this couple could likely afford a home priced around $415,000.
Tips to Increase Your Budget
If the calculator shows a lower number than you hoped, consider these strategies:
Pay down high-interest debt: Reducing your monthly car or credit card payments immediately increases the "DTI room" available for a mortgage.
Improve your credit score: A higher score qualifies you for lower interest rates, which lowers your monthly payment.
Save a larger down payment: This reduces the principal loan amount and may remove the cost of PMI.
function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var propertyTaxRate = parseFloat(document.getElementById("propertyTax").value);
if (isNaN(annualIncome) || isNaN(interestRate) || annualIncome 0) {
var powerFactor = Math.pow(1 + monthlyRate, numberOfPayments);
loanAmount = estimatedPI / ((monthlyRate * powerFactor) / (powerFactor – 1));
} else {
loanAmount = estimatedPI * numberOfPayments;
}
// 6. Total Home Price
var maxHomePrice = loanAmount + downPayment;
// 7. Calculate precise monthly taxes for the result display
var monthlyTax = (maxHomePrice * (propertyTaxRate / 100)) / 12;
var monthlyIns = (maxHomePrice * 0.0035) / 12; // Roughly 0.35% for insurance
// Display Results
document.getElementById("results").style.display = "block";
document.getElementById("maxHomePrice").innerText = "$" + Math.round(maxHomePrice).toLocaleString();
document.getElementById("resMonthlyPI").innerText = "$" + Math.round(estimatedPI).toLocaleString();
document.getElementById("resMonthlyTax").innerText = "$" + Math.round(monthlyTax + monthlyIns).toLocaleString();
document.getElementById("resLoanAmount").innerText = "$" + Math.round(loanAmount).toLocaleString();
// Smooth scroll to results
document.getElementById("results").scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}