Progressive Interest Rate Calculator

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Mortgage Affordability Calculator

15 Years 30 Years
You can afford a home price of:
$0
Est. Monthly Payment: $0

*Based on a 36% Debt-to-Income ratio (Back-end) or 28% Housing ratio (Front-end), whichever is lower.

Understanding Mortgage Affordability

Determine exactly how much house you can afford is the most critical first step in the home buying process. This calculator uses standard lender guidelines to estimate your purchasing power based on your income, debts, and current market conditions. Rather than guessing, we apply the 28/36 rule to ensure you aren't overleveraging your finances.

The 28/36 Rule Explained

Lenders typically look at two primary ratios when approving a mortgage:

  • The Front-End Ratio (28%): This rule states that your total housing costs (mortgage principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income.
  • The Back-End Ratio (36%): This encompasses your total debt load. It states that your housing costs plus all other monthly recurring debts (student loans, car payments, credit cards) should not exceed 36% of your gross monthly income.

Our calculator computes both scenarios and limits your affordability to the lower (safer) number, ensuring you stay within a budget that lenders are likely to approve.

Factors That Impact Your Buying Power

While income is important, your Debt-to-Income (DTI) ratio is often the deciding factor. High monthly debts reduce the amount of income available for a mortgage payment, significantly lowering your purchasing price range. Additionally, the Interest Rate plays a massive role; a 1% increase in rates can reduce your buying power by roughly 10%. Don't forget to account for property taxes and homeowners insurance, as these ongoing costs are bundled into your monthly obligations.

Why Down Payment Matters

Your down payment does two things: it reduces the loan amount (lowering monthly payments) and it instantly increases the maximum price of the home you can buy. A larger down payment can also help you avoid Private Mortgage Insurance (PMI), further reducing monthly costs and increasing your effective budget.

function calculateAffordability() { // 1. Get Input Values var income = parseFloat(document.getElementById('annualIncome').value); var debts = parseFloat(document.getElementById('monthlyDebts').value); var downPayment = parseFloat(document.getElementById('downPayment').value); var interestRate = parseFloat(document.getElementById('interestRate').value); var years = parseFloat(document.getElementById('loanTerm').value); var taxRateYearly = parseFloat(document.getElementById('propertyTax').value); var insuranceYearly = parseFloat(document.getElementById('homeInsurance').value); var hoaMonthly = parseFloat(document.getElementById('hoaFees').value); // Validation if (isNaN(income) || income <= 0) { alert("Please enter a valid Annual Income."); return; } if (isNaN(debts)) debts = 0; if (isNaN(downPayment)) downPayment = 0; if (isNaN(interestRate)) interestRate = 0; if (isNaN(taxRateYearly)) taxRateYearly = 0; if (isNaN(insuranceYearly)) insuranceYearly = 0; if (isNaN(hoaMonthly)) hoaMonthly = 0; // 2. Variables for calculation var monthlyIncome = income / 12; var r = (interestRate / 100) / 12; // Monthly interest rate var n = years * 12; // Total months var insuranceMonthly = insuranceYearly / 12; var taxRateMonthly = (taxRateYearly / 100) / 12; // Tax rate per month based on home price // 3. Calculate Maximum Allowable Monthly Payment (PITI + HOA) // Rule 1: Front-end (28% of income) var limitFront = monthlyIncome * 0.28; // Rule 2: Back-end (36% of income minus debts) var limitBack = (monthlyIncome * 0.36) – debts; // The bank takes the lower of the two limits var maxTotalPayment = Math.min(limitFront, limitBack); // If debts are too high, affordability might be zero or negative if (maxTotalPayment <= 0) { document.getElementById('maxHomePrice').innerHTML = "$0"; document.getElementById('monthlyPaymentResult').innerHTML = "Debts are too high compared to income."; document.getElementById('resultBox').style.display = "block"; return; } // 4. Reverse Calculate Home Price // Formula components: // TotalPayment = P&I + Tax + Insurance + HOA // P&I = (Price – Down) * MortgageFactor // Tax = Price * TaxRateMonthly // Therefore: TotalPayment – Insurance – HOA = (Price – Down)*MF + Price*TaxRate // var NetAvailable = TotalPayment – Insurance – HOA // NetAvailable = Price*MF – Down*MF + Price*TaxRate // NetAvailable + Down*MF = Price * (MF + TaxRate) // Price = (NetAvailable + Down*MF) / (MF + TaxRate) var mortgageFactor = 0; if (interestRate === 0) { mortgageFactor = 1 / n; } else { mortgageFactor = (r * Math.pow(1 + r, n)) / (Math.pow(1 + r, n) – 1); } var netAvailableForMortgageAndTax = maxTotalPayment – insuranceMonthly – hoaMonthly; var maxPrice = 0; // If expenses (HOA + Insurance) exceed the max payment allowed if (netAvailableForMortgageAndTax <= 0) { maxPrice = 0; } else { var numerator = netAvailableForMortgageAndTax + (downPayment * mortgageFactor); var denominator = mortgageFactor + taxRateMonthly; maxPrice = numerator / denominator; } // Ensure price isn't less than down payment (edge case) if (maxPrice < downPayment) { maxPrice = downPayment; } // 5. Formatting Results var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 }); document.getElementById('maxHomePrice').innerHTML = formatter.format(maxPrice); document.getElementById('monthlyPaymentResult').innerHTML = "Est. Monthly Payment: " + formatter.format(maxTotalPayment); // Show result box document.getElementById('resultBox').style.display = "block"; }

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