Determine your realistic home purchasing power based on your income, existing debts, and current mortgage rates. This calculator uses standard debt-to-income (DTI) ratios to estimate a responsible budget.
Your total income before taxes.
Car loans, student loans, credit card minimums.
Cash savings available for the home purchase.
Current mortgage market rate.
30 Years
20 Years
15 Years
Understanding How Much House You Can Afford
Before starting your home search, it is crucial to understand your financial boundaries. Buying a home at the top of your pre-approval limit can leave you "house poor," struggling to afford repairs, furniture, or other life goals.
The Key Factor: Debt-to-Income Ratio (DTI)
Lenders primarily use your Debt-to-Income ratio to determine how much they are willing to lend. This calculator uses a conservative "back-end ratio" of 36%. This means your total monthly debt obligations—including your future mortgage principal, interest, taxes, insurance (PITI), plus existing debts like car payments and student loans—should not exceed 36% of your gross monthly income.
How the Calculation Works
The calculator follows these steps to estimate your purchasing power:
Calculate Monthly Gross Income: Your annual salary divided by 12.
Determine Max Total Payment: Multiplies monthly income by 0.36 (the DTI limit).
Calculate Max Housing Payment: Subtracts your existing monthly debts from the Max Total Payment.
Estimate Loan Amount: Uses the Max Housing Payment (reduced by an estimated 25% factor to account for property taxes and homeowners insurance) to reverse-calculate the maximum loan size supported at the given interest rate.
Final Price: Adds your available down payment to the maximum loan amount.
Example Scenario
Imagine a household with a gross annual income of $90,000 ($7,500/month) and existing monthly debts of $700 (perhaps a car payment and student loan). They have saved $45,000 for a down payment. With a 30-year fixed mortgage at an interest rate of 7.0%:
Max allowable total debt payment (36% DTI) is $2,700/month.
Max allowable housing payment is $2,000/month ($2,700 – $700 existing debt).
After estimating taxes and insurance, this payment supports a loan of approximately $225,000.
Adding the $45,000 down payment, the estimated affordable home price is roughly $270,000.
Keep in mind that this is an estimate. Actual qualification depends on your credit score, specific lender guidelines, and the exact property taxes and insurance costs of the home you choose.
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function calculateAffordability() {
var incomeInput = document.getElementById("annualIncome");
var debtsInput = document.getElementById("monthlyDebts");
var downPaymentInput = document.getElementById("downPayment");
var rateInput = document.getElementById("interestRate");
var termInput = document.getElementById("loanTerm");
var resultDiv = document.getElementById("affordabilityResult");
var income = parseFloat(incomeInput.value);
var debts = parseFloat(debtsInput.value);
var downPayment = parseFloat(downPaymentInput.value);
var rate = parseFloat(rateInput.value);
var years = parseFloat(termInput.value);
resultDiv.style.display = "block";
// Validation to ensure positive numbers
if (isNaN(income) || income < 0 || isNaN(debts) || debts < 0 || isNaN(downPayment) || downPayment < 0 || isNaN(rate) || rate <= 0 || isNaN(years) || years <= 0) {
resultDiv.innerHTML = "Please enter valid, positive numbers for all fields, and ensure the interest rate is greater than zero.";
return;
}
var monthlyGrossIncome = income / 12;
// Define DTI Threshold (36% Back-end ratio standard)
var dtiLimit = 0.36;
var maxTotalAllowable DebtPayment = monthlyGrossIncome * dtiLimit;
// Max payment available for housing (Principal, Interest, Taxes, Insurance) after existing debts
var maxHousingPaymentPITI = maxTotalAllowableDebtPayment – debts;
if (maxHousingPaymentPITI <= 0) {
resultDiv.innerHTML = "Based on the income and high existing debts provided, it appears you may not qualify for a mortgage based on standard DTI guidelines.";
return;
}
// Estimate Tax and Insurance factor.
// We assume Taxes and Insurance consume about 25% of the total housing payment, leaving 75% for Principal & Interest.
var estimatedPIFactor = 0.75;
var availableForPI = maxHousingPaymentPITI * estimatedPIFactor;
var monthlyInterestRate = rate / 100 / 12;
var numberOfPayments = years * 12;
// Amortization Formula derived to find Principal (Loan Amount)
// Loan Amount = (P&I Payment / monthlyRate) * (1 – (1 + monthlyRate)^(-numberOfPayments))
var discountFactor = (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
var maxLoanAmount = availableForPI * discountFactor;
var maxAffordablePrice = maxLoanAmount + downPayment;
// Formatting
var currencyFormatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0
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var outputHtml = "
Affordability Estimate
";
outputHtml += "Based on a standard 36% debt-to-income ratio guideline:";
outputHtml += "
";
outputHtml += "
Estimated Maximum Home Price: " + currencyFormatter.format(maxAffordablePrice) + "
";
outputHtml += "
Max Monthly Housing Payment (incl. est. taxes/insurance): " + currencyFormatter.format(maxHousingPaymentPITI) + "
";
outputHtml += "
Maximum Loan Amount: " + currencyFormatter.format(maxLoanAmount) + "
";
outputHtml += "
";
outputHtml += "Note: This is an estimate assuming property taxes and insurance are approximately 25% of your housing payment. Actual affordability will vary based on specific property costs and lender requirements.";
resultDiv.innerHTML = outputHtml;
}