function calculateMortgageAffordability() {
// 1. Get Inputs
var annualIncome = parseFloat(document.getElementById('macAnnualIncome').value);
var monthlyDebts = parseFloat(document.getElementById('macMonthlyDebts').value);
var downPayment = parseFloat(document.getElementById('macDownPayment').value);
var interestRate = parseFloat(document.getElementById('macInterestRate').value);
var loanTermYears = parseInt(document.getElementById('macLoanTerm').value);
var taxRatePercent = parseFloat(document.getElementById('macPropertyTax').value);
var annualInsurance = parseFloat(document.getElementById('macHomeInsurance').value);
var monthlyHOA = parseFloat(document.getElementById('macHOA').value);
// 2. Validation
if (isNaN(annualIncome) || annualIncome <= 0) {
alert("Please enter a valid Annual Income.");
return;
}
if (isNaN(monthlyDebts)) monthlyDebts = 0;
if (isNaN(downPayment)) downPayment = 0;
if (isNaN(interestRate) || interestRate <= 0) interestRate = 6.5; // Default safety
if (isNaN(taxRatePercent)) taxRatePercent = 1.2;
if (isNaN(annualInsurance)) annualInsurance = 1200;
if (isNaN(monthlyHOA)) monthlyHOA = 0;
// 3. Logic: 28/36 Rule
var monthlyIncome = annualIncome / 12;
// Front-end ratio (28% of income)
var maxHousingFront = monthlyIncome * 0.28;
// Back-end ratio (36% of income – debts)
var maxHousingBack = (monthlyIncome * 0.36) – monthlyDebts;
// The bank usually takes the lower of the two
var maxAllowableMonthlyPayment = Math.min(maxHousingFront, maxHousingBack);
// Ensure max payment isn't negative (too much debt)
if (maxAllowableMonthlyPayment <= 0) {
document.getElementById('macResults').style.display = 'block';
document.getElementById('macMaxPriceResult').innerText = "$0";
document.getElementById('macMonthlyPI').innerText = "$0";
document.getElementById('macTaxIns').innerText = "$0";
document.getElementById('macTotalMonthly').innerText = "$0";
document.getElementById('macLoanAmount').innerText = "$0";
return;
}
// We need to solve for Home Price (P)
// Total Payment = Mortgage(M) + Tax(T) + Insurance(I) + HOA
// Mortgage M is based on Loan Amount (P – DownPayment)
// T is P * (TaxRate/100/12)
// I is AnnualInsurance / 12 (Fixed amount input, though typically proportional, we used fixed input here for simplicity)
// HOA is fixed
// Equation: MaxPayment = [ (P – Down) * r(1+r)^n / ((1+r)^n – 1) ] + [ P * TaxRateMonthly ] + MonthlyIns + HOA
// Constants calculation
var monthlyRate = interestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
var mortgageFactor = (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
var monthlyTaxRate = taxRatePercent / 100 / 12;
var fixedMonthlyCosts = (annualInsurance / 12) + monthlyHOA;
// Rearranging the formula:
// MaxPayment – FixedCosts = (P * MortFactor) – (Down * MortFactor) + (P * MonthlyTaxRate)
// MaxPayment – FixedCosts + (Down * MortFactor) = P * (MortFactor + MonthlyTaxRate)
// P = (MaxPayment – FixedCosts + (Down * MortFactor)) / (MortFactor + MonthlyTaxRate)
var numerator = maxAllowableMonthlyPayment – fixedMonthlyCosts + (downPayment * mortgageFactor);
var denominator = mortgageFactor + monthlyTaxRate;
var maxHomePrice = numerator / denominator;
// Edge case: If the calculation results in a price lower than down payment or negative
if (maxHomePrice < downPayment) {
maxHomePrice = downPayment; // You can at least afford what you have in cash
}
// Calculate breakdown based on this max price
var loanAmount = maxHomePrice – downPayment;
if (loanAmount < 0) loanAmount = 0;
var monthlyPrincipalInterest = loanAmount * mortgageFactor;
var monthlyTax = maxHomePrice * monthlyTaxRate;
var totalMonthly = monthlyPrincipalInterest + monthlyTax + fixedMonthlyCosts;
// 4. Output Display
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
maximumFractionDigits: 0
});
document.getElementById('macMaxPriceResult').innerText = formatter.format(maxHomePrice);
document.getElementById('macMonthlyPI').innerText = formatter.format(monthlyPrincipalInterest);
document.getElementById('macTaxIns').innerText = formatter.format(monthlyTax + (annualInsurance/12) + monthlyHOA);
document.getElementById('macTotalMonthly').innerText = formatter.format(totalMonthly);
document.getElementById('macLoanAmount').innerText = formatter.format(loanAmount);
document.getElementById('macResults').style.display = 'block';
}
How Much House Can You Really Afford?
Determining your budget is the first critical step in the home buying process. This Mortgage Affordability Calculator uses the standard debt-to-income (DTI) ratios that lenders use to evaluate your loan application.
Understanding the 28/36 Rule
Most financial advisers and lenders stick to the "28/36 rule" to determine affordability:
Front-End Ratio (28%): Your monthly housing costs (principal, interest, taxes, insurance, and HOA) should not exceed 28% of your gross monthly income.
Back-End Ratio (36%): Your total monthly debt payments (housing costs plus credit cards, student loans, car loans) should not exceed 36% of your gross monthly income.
Why Your Down Payment Matters
Your down payment significantly impacts your purchasing power. A larger down payment reduces the loan amount, which lowers your monthly principal and interest payments. This allows the same monthly income to support a higher total home price. Furthermore, if you put down at least 20%, you typically avoid Private Mortgage Insurance (PMI), saving you hundreds of dollars per month.
The Impact of Interest Rates
Interest rates are a major factor in affordability. As rates rise, the cost to borrow money increases, which reduces the maximum home price you can afford while keeping monthly payments steady. For example, a 1% increase in interest rates can reduce your purchasing power by approximately 10-11%.
Estimated Closing Costs
Remember that the "Sticker Price" of the home isn't your only expense. When budgeting, ensure you have savings set aside for closing costs, which typically range from 2% to 5% of the loan amount. These include appraisal fees, title insurance, and loan origination fees.