Determine how much house you can realistically afford by analyzing your income, current debts, down payment savings, and current mortgage interest rates. This calculator uses standard lender debt-to-income (DTI) ratios to estimate your maximum purchasing power.
Financial Inputs
Mortgage & Property Details
Affordability Results
Maximum Home Price: –
Estimated Total Monthly Payment: – (Includes Principal, Interest, Taxes, and Insurance)
Loan Amount needed: –
function calculateAffordability() {
// 1. Get Inputs and Validate
var annualIncome = parseFloat(document.getElementById("maAnnualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("maMonthlyDebt").value);
var downPayment = parseFloat(document.getElementById("maDownPayment").value);
var interestRate = parseFloat(document.getElementById("maInterestRate").value);
var loanTermYears = parseInt(document.getElementById("maLoanTerm").value);
var annualTaxRate = parseFloat(document.getElementById("maTaxRate").value);
var annualInsurance = parseFloat(document.getElementById("maInsurance").value);
if (isNaN(annualIncome) || annualIncome <= 0 || isNaN(interestRate) || interestRate <= 0 || isNaN(downPayment) || downPayment < 0) {
alert("Please enter valid, positive numbers for Income, Down Payment, and Interest Rate.");
return;
}
if (isNaN(monthlyDebt)) monthlyDebt = 0;
if (isNaN(annualTaxRate)) annualTaxRate = 1.2; // Default if missing
if (isNaN(annualInsurance)) annualInsurance = 1200; // Default if missing
// 2. Constants and Conversions
var monthlyGrossIncome = annualIncome / 12;
var monthlyInterestRate = (interestRate / 100) / 12;
var totalPayments = loanTermYears * 12;
var monthlyTaxRateDecimal = (annualTaxRate / 100) / 12;
var monthlyInsurance = annualInsurance / 12;
// 3. Define DTI Thresholds (Conservative standard: 28% front-end, 36% back-end)
var frontEndRatio = 0.28;
var backEndRatio = 0.36;
// 4. Calculate Max Allowed Monthly Payment based on DTI ratios
var maxFrontEndPayment = monthlyGrossIncome * frontEndRatio;
var maxBackEndTotalDebt = monthlyGrossIncome * backEndRatio;
var maxBackEndHousingPayment = maxBackEndTotalDebt – monthlyDebt;
// The limiting factor is the lower of the two approaches
var maxAllowedTotalMonthlyPayment = Math.min(maxFrontEndPayment, maxBackEndHousingPayment);
// Ensure max payment isn't negative (if debts exceed income limits)
if (maxAllowedTotalMonthlyPayment <= monthlyInsurance) {
document.getElementById("maResult").style.display = "block";
document.getElementById("maMaxHomePrice").innerHTML = "$0 (Debts too high relative to income)";
document.getElementById("maMonthlyPayment").innerHTML = "$0";
document.getElementById("maLoanAmount").innerHTML = "$0";
return;
}
// 5. Calculate Mortgage Payment Factor formula: (r(1+r)^n) / ((1+r)^n – 1)
var mortgageFactor = (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, totalPayments)) / (Math.pow(1 + monthlyInterestRate, totalPayments) – 1);
// 6. Reverse solve for Home Price (H)
// TotalPayment (P) = (LoanAmount * Factor) + (HomePrice * MonthlyTaxRate) + MonthlyInsurance
// LoanAmount = HomePrice (H) – DownPayment (D)
// P = ((H – D) * Factor) + (H * MonthlyTaxRate) + MonthlyInsurance
// P – MonthlyInsurance = H*Factor – D*Factor + H*MonthlyTaxRate
// P – MonthlyInsurance + (D*Factor) = H(Factor + MonthlyTaxRate)
// H = (P – MonthlyInsurance + (D * Factor)) / (Factor + MonthlyTaxRate)
var numerator = maxAllowedTotalMonthlyPayment – monthlyInsurance + (downPayment * mortgageFactor);
var denominator = mortgageFactor + monthlyTaxRateDecimal;
var maxHomePrice = numerator / denominator;
// Final sanity check, home price can't be less than down payment
if (maxHomePrice < downPayment) {
maxHomePrice = downPayment;
}
var loanAmount = maxHomePrice – downPayment;
if (loanAmount < 0) loanAmount = 0;
// Recalculate exact monthly payment based on final home price to ensure accuracy
var principalAndInterest = loanAmount * mortgageFactor;
var monthlyTaxes = maxHomePrice * monthlyTaxRateDecimal;
var finalMonthlyPayment = principalAndInterest + monthlyTaxes + monthlyInsurance;
// 7. Format and Display Results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
document.getElementById("maResult").style.display = "block";
document.getElementById("maMaxHomePrice").innerHTML = formatter.format(maxHomePrice);
document.getElementById("maMonthlyPayment").innerHTML = formatter.format(finalMonthlyPayment) + "/mo";
document.getElementById("maLoanAmount").innerHTML = formatter.format(loanAmount);
}
Understanding Your Mortgage Affordability
When beginning your homebuying journey, the most crucial first step is determining "how much house can I afford?" This isn't just about the sticker price of the property; it's about understanding how a mortgage payment fits into your broader financial picture.
The Role of Debt-to-Income (DTI) Ratios
Lenders use Debt-to-Income (DTI) ratios to assess your ability to repay a mortgage. This calculator uses standard conventional loan guidelines, specifically focusing on two types of DTI:
Front-End Ratio (Housing Ratio): The percentage of your gross monthly income that goes toward housing costs (principal, interest, taxes, and insurance). Lenders typically prefer this to be 28% or lower.
Back-End Ratio (Total Debt Ratio): The percentage of your gross monthly income that goes toward all recurring debt payments, including housing costs plus car loans, student loans, and minimum credit card payments. Lenders generally prefer this to be 36% or lower, though some loan programs allow higher ratios.
Our calculator determines your maximum affordability by taking the more conservative limit of these two ratios based on the income and debt figures you provide.
How Interest Rates Impact Affordability
Interest rates have a significant impact on your purchasing power. Even a small increase in the interest rate can drastically increase your monthly interest costs, thereby reducing the maximum loan amount you qualify for while staying within lender DTI guidelines.
Example Scenario
Consider a household with a gross annual income of $95,000. They have managed to save $50,000 for a down payment. Their existing monthly debts (a car lease and student loans) total $600 per month. Assuming a current 30-year fixed mortgage rate of 6.5%, annual property taxes of 1.2% of the home value, and annual insurance of $1,200:
Based on standard lender guidelines, their maximum affordable home price would be approximately $365,000. This would result in a total estimated monthly payment of around $2,680 (including taxes and insurance). If the interest rate were to drop to 5.5%, their purchasing power would increase significantly, allowing them to afford a home closer to $395,000 while keeping a similar monthly payment structure.
Note: This tool provides an estimate for planning purposes. You should always consult with a qualified mortgage lender for formal pre-approval.