function calculateAffordability() {
// 1. Get Input Elements
var annualIncomeInput = document.getElementById('annualIncome');
var monthlyDebtsInput = document.getElementById('monthlyDebts');
var downPaymentInput = document.getElementById('downPayment');
var interestRateInput = document.getElementById('interestRate');
var loanTermInput = document.getElementById('loanTerm');
var propertyTaxInput = document.getElementById('propertyTax');
var homeInsuranceInput = document.getElementById('homeInsurance');
var errorDisplay = document.getElementById('errorDisplay');
var resultsArea = document.getElementById('resultsArea');
// 2. Parse Values (default to 0 if empty)
var annualIncome = parseFloat(annualIncomeInput.value) || 0;
var monthlyDebts = parseFloat(monthlyDebtsInput.value) || 0;
var downPayment = parseFloat(downPaymentInput.value) || 0;
var interestRate = parseFloat(interestRateInput.value) || 0;
var loanTerm = parseFloat(loanTermInput.value) || 30;
var annualTax = parseFloat(propertyTaxInput.value) || 0;
var annualInsurance = parseFloat(homeInsuranceInput.value) || 0;
// 3. Validation
if (annualIncome <= 0 || loanTerm <= 0) {
errorDisplay.style.display = 'block';
errorDisplay.innerText = "Please enter a valid income and loan term.";
resultsArea.classList.remove('visible');
return;
} else {
errorDisplay.style.display = 'none';
}
// 4. Logic: 28/36 Rule
var monthlyIncome = annualIncome / 12;
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
// Front-end Ratio (28% of gross income)
var frontEndLimit = monthlyIncome * 0.28;
// Back-end Ratio (36% of gross income minus debts)
var backEndLimit = (monthlyIncome * 0.36) – monthlyDebts;
// The bank takes the LOWER of the two limits as the max allowable housing payment
var maxTotalMonthlyPayment = Math.min(frontEndLimit, backEndLimit);
// Ensure result isn't negative if debts are too high
if (maxTotalMonthlyPayment 0) {
// Calculate Max Loan Amount using PV formula: PV = PMT * (1 – (1+r)^-n) / r
if (interestRate === 0) {
// Simple division if 0% interest
maxLoanAmount = maxPrincipalAndInterest * (loanTerm * 12);
} else {
var monthlyRate = (interestRate / 100) / 12;
var totalMonths = loanTerm * 12;
maxLoanAmount = maxPrincipalAndInterest * (1 – Math.pow(1 + monthlyRate, -totalMonths)) / monthlyRate;
}
}
var maxHomePrice = maxLoanAmount + downPayment;
// 5. Display Results
document.getElementById('maxHomePrice').innerText = '$' + Math.floor(maxHomePrice).toLocaleString();
document.getElementById('maxMonthlyPayment').innerText = '$' + Math.floor(maxTotalMonthlyPayment).toLocaleString();
document.getElementById('loanAmountResult').innerText = '$' + Math.floor(maxLoanAmount).toLocaleString();
resultsArea.classList.add('visible');
}
How Much House Can I Afford?
Determining your home buying budget is the critical first step in the journey to homeownership. This Mortgage Affordability Calculator helps you estimate a realistic purchase price based on your income, existing debts, and current interest rates.
Understanding the 28/36 Rule
Lenders typically use two main ratios to determine how much money they are willing to lend you. These are known as the "Front-End" and "Back-End" debt-to-income (DTI) ratios. Our calculator uses the standard 28/36 rule to ensure accurate results:
Front-End Ratio (28%): This rule states that your total monthly housing costs (principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income.
Back-End Ratio (36%): This rule states that your total monthly debt payments (housing costs + credit cards, car loans, student loans, etc.) should not exceed 36% of your gross monthly income.
The calculator compares both limits and uses the lower figure to determine your maximum safe monthly payment.
Key Factors Affecting Your Affordability
Several variables impact the final home price you can afford. Understanding these can help you strategize to increase your budget:
1. Gross Annual Income
This is your total income before taxes. Lenders look for stable employment history. Higher income directly increases the ceiling for both the 28% and 36% ratios.
2. Monthly Debt Obligations
High monthly debts (like a hefty car payment or student loans) drastically reduce your back-end ratio. Paying off a credit card or a small loan before applying for a mortgage can significantly boost your borrowing power.
3. The Down Payment
Your down payment does not affect the monthly payment ratios directly, but it acts as a lever for the total home price. For every dollar you put down, your buying power increases by exactly one dollar, provided your loan amount stays the same. A larger down payment also reduces your Loan-to-Value (LTV) ratio, potentially securing a lower interest rate.
4. Interest Rates
Interest rates determine the cost of borrowing money. Even a 1% increase in rates can reduce your buying power by tens of thousands of dollars because more of your monthly payment goes toward interest rather than principal.
Tips to Increase Home Affordability
Pay down high-interest debt: Reducing your monthly recurring obligations frees up room in your back-end DTI ratio.
Improve your credit score: A better credit score often qualifies you for lower interest rates, which lowers your monthly payment for the same loan amount.
Save for a larger down payment: This reduces the amount you need to borrow and eliminates the need for Private Mortgage Insurance (PMI) if you reach 20% equity.
Shop around for insurance: Lower homeowners insurance premiums reduce your monthly housing costs, allowing you to allocate more money toward the mortgage principal.
Using this Calculator for Pre-Approval
While this calculator provides a mathematical estimate based on industry standards, it is not a guarantee of lending. Lenders may have stricter or looser requirements depending on the loan program (e.g., FHA loans often allow higher DTI ratios than conventional loans). Use these figures as a guideline to set your budget before speaking with a mortgage professional.