Income Tax Rate Calculator

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Home Affordability Calculator

Determine the maximum home price you can afford based on your financial profile.

30 Years Fixed 20 Years Fixed 15 Years Fixed 10 Years Fixed
Conservative (36%) Moderate (43%) Aggressive (50%)

You Can Afford a House Up To:

$0
Monthly Payment $0
Loan Amount $0
Down Payment % 0%

How Is Home Affordability Calculated?

Understanding how much house you can afford involves more than just looking at your monthly income. Lenders use specific formulas to ensure you can comfortably manage your mortgage alongside other financial obligations. The primary factor used is the Debt-to-Income (DTI) ratio.

The 28/36 Rule

A standard guideline used by mortgage lenders is the 28/36 rule. This suggests that your total housing costs (Principal, Interest, Taxes, and Insurance) should not exceed 28% of your gross monthly income, and your total debt payments (including the new mortgage) should not exceed 36%. Our calculator allows you to adjust this ratio to see how it impacts your purchasing power.

Factors Impacting Your Budget

  • Gross Annual Income: Your total income before taxes is the starting point for all calculations.
  • Current Debt: Monthly payments for student loans, car notes, and credit cards reduce the amount left over for a mortgage.
  • Down Payment: A larger down payment reduces the loan amount needed, lowering your monthly interest costs and potentially eliminating Private Mortgage Insurance (PMI).
  • Interest Rates: Even a 1% change in interest rates can shift your home buying power by tens of thousands of dollars.

Example Calculation

If you earn $100,000 annually ($8,333/month) and have $500 in monthly debt, a lender using a 43% DTI ratio would allow a maximum total monthly debt of $3,583. Subtracting your current $500 debt leaves $3,083 for your monthly mortgage payment. At a 6.5% interest rate on a 30-year term, this monthly payment could support a loan of roughly $487,000. If you have a $50,000 down payment, your total home affordability would be approximately $537,000.

Tips to Increase Your Affordability

If the result isn't what you hoped for, consider these three strategies: First, focus on paying down high-interest debt to lower your DTI. Second, improve your credit score to secure a lower interest rate. Third, save for a larger down payment to decrease your monthly loan obligation.

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 = parseInt(document.getElementById('loanTerm').value); var dtiRatio = parseFloat(document.getElementById('dtiRatio').value); if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate)) { alert("Please enter valid numbers in all fields."); return; } // Monthly gross income var monthlyIncome = annualIncome / 12; // Max total monthly debt allowed based on DTI var maxTotalMonthlyDebt = monthlyIncome * dtiRatio; // Max monthly mortgage payment (PITI – Principal, Interest, Taxes, Insurance) // We deduct 1.2% for estimated taxes and insurance from the available monthly budget var availableForMortgage = maxTotalMonthlyDebt – monthlyDebt; // Approximate for Taxes and Insurance (Estimating 15% of the payment goes to T&I) var monthlyPI = availableForMortgage * 0.85; if (monthlyPI <= 0) { document.getElementById('maxHomePrice').innerText = "N/A"; document.getElementById('monthlyPITI').innerText = "$0"; document.getElementById('loanAmt').innerText = "$0"; document.getElementById('dpPercent').innerText = "0%"; document.getElementById('resultArea').style.display = "block"; return; } // Mortgage formula: Loan = PI * [1 – (1 + r)^-n] / r var monthlyRate = (interestRate / 100) / 12; var totalMonths = loanTerm * 12; var loanAmount = monthlyPI * (1 – Math.pow(1 + monthlyRate, -totalMonths)) / monthlyRate; var totalHomePrice = loanAmount + downPayment; var dpPercent = (downPayment / totalHomePrice) * 100; // Display Results document.getElementById('maxHomePrice').innerText = "$" + Math.round(totalHomePrice).toLocaleString(); document.getElementById('monthlyPITI').innerText = "$" + Math.round(availableForMortgage).toLocaleString(); document.getElementById('loanAmt').innerText = "$" + Math.round(loanAmount).toLocaleString(); document.getElementById('dpPercent').innerText = dpPercent.toFixed(1) + "%"; document.getElementById('resultArea').style.display = "block"; // Smooth scroll to result document.getElementById('resultArea').scrollIntoView({ behavior: 'smooth', block: 'nearest' }); }

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