Determine exactly how much house you can afford based on the 28/36 rule.
30 Years Fixed
15 Years Fixed
20 Years Fixed
Estimated Max Home Price: $0
Maximum Monthly P&I: $0
Suggested Down Payment: $0
*Based on standard lender guidelines where total housing costs do not exceed 28% of gross income.
How Much House Can I Afford?
Understanding your home buying power is the first step in the real estate journey. Lenders primarily look at your Debt-to-Income (DTI) ratio to determine your eligibility for a mortgage. This calculator uses the industry-standard "28/36 Rule."
The 28/36 Rule Explained
Front-End Ratio (28%): Your mortgage payment, including taxes and insurance, should not exceed 28% of your gross monthly income.
Back-End Ratio (36%): Your total debt payments (mortgage plus car loans, student loans, and credit cards) should not exceed 36% of your gross monthly income.
Example Calculation:
If you earn $100,000 per year, your gross monthly income is $8,333.
28% of $8,333 = $2,333 (Max Monthly Housing Payment).
If you have $500 in existing monthly debts, the 36% rule allows for $3,000 in total debt. Since $3,000 – $500 = $2,500, the 28% rule ($2,333) is the limiting factor.
Factors Influencing Your Budget
While income is the primary driver, several other factors drastically change your final purchase price:
Interest Rates: A 1% increase in interest rates can reduce your buying power by approximately 10%.
Down Payment: The larger your down payment, the lower your monthly loan amount, which allows you to purchase a more expensive property with the same monthly income.
Property Taxes & Insurance: These "hidden" costs vary significantly by ZIP code and can eat into your monthly payment allowance.
Credit Score: Higher scores qualify you for lower interest rates, effectively increasing the home price you can afford.
function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById('annualIncome').value);
var monthlyDebts = parseFloat(document.getElementById('monthlyDebts').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var annualInterest = parseFloat(document.getElementById('interestRate').value);
var years = parseInt(document.getElementById('loanTerm').value);
var taxRate = parseFloat(document.getElementById('propertyTax').value) / 100;
if (isNaN(annualIncome) || isNaN(monthlyDebts) || isNaN(downPayment) || isNaN(annualInterest)) {
alert("Please enter valid numerical values.");
return;
}
var monthlyGross = annualIncome / 12;
// Rule 1: 28% of gross income for PITI (Principal, Interest, Taxes, Insurance)
var limit28 = monthlyGross * 0.28;
// Rule 2: 36% of gross income minus existing debts
var limit36 = (monthlyGross * 0.36) – monthlyDebts;
// The lower of the two is the max monthly PITI
var maxPITI = Math.min(limit28, limit36);
// Estimating Insurance and Taxes take up about 20% of the PITI payment
// We will calculate a more precise estimate:
// P&I = maxPITI – (Estimated Taxes + Estimated Insurance)
// For simplicity, we assume Insurance is $100/mo and Taxes are calculated based on price
// This requires an iterative approach or a derived formula.
var monthlyRate = (annualInterest / 100) / 12;
var numberOfPayments = years * 12;
// Formula for Monthly Principal & Interest:
// P = [r * PV] / [1 – (1 + r)^-n]
// PV = P * [1 – (1 + r)^-n] / r
// We need to solve for Price where:
// maxPITI = [MonthlyPI(Price – Down)] + (Price * TaxRate / 12) + Insurance
// maxPITI – Insurance = (Price – Down) * [r / (1-(1+r)^-n)] + (Price * TaxRate / 12)
var monthlyInsurance = 125; // Average estimate
var factor = monthlyRate / (1 – Math.pow(1 + monthlyRate, -numberOfPayments));
var monthlyTaxFactor = taxRate / 12;
// Price * factor – Down * factor + Price * monthlyTaxFactor = maxPITI – monthlyInsurance
// Price * (factor + monthlyTaxFactor) = maxPITI – monthlyInsurance + (Down * factor)
var maxPrice = (maxPITI – monthlyInsurance + (downPayment * factor)) / (factor + monthlyTaxFactor);
if (maxPrice < downPayment) {
maxPrice = downPayment;
}
var finalMonthlyPI = (maxPrice – downPayment) * factor;
// Formatting results
document.getElementById('maxHomePrice').innerHTML = "$" + Math.round(maxPrice).toLocaleString();
document.getElementById('maxMonthlyPI').innerHTML = "$" + Math.round(finalMonthlyPI).toLocaleString();
document.getElementById('suggestedDown').innerHTML = "$" + downPayment.toLocaleString();
document.getElementById('affordabilityResult').style.display = "block";
}