Mortgage Affordability Calculator
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max-width: 800px;
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You Can Afford A House Up To
$0
Debt-to-Income (Front)
28%
Understanding Home Affordability
Before beginning your house hunt, it is crucial to determine "how much house can I afford." This prevents the heartbreak of falling in love with a property that is outside your financial reach and ensures you maintain financial stability after purchasing. Our Mortgage Affordability Calculator uses standard lender guidelines to provide a realistic estimate.
The 28/36 Rule Explained
Most financial advisors and mortgage lenders use the 28/36 rule to determine affordability. This rule consists of two distinct debt-to-income (DTI) ratios:
- Front-End Ratio (28%): Your monthly housing costs (mortgage principal, interest, property taxes, and insurance) should not exceed 28% of your gross monthly income.
- Back-End Ratio (36%): Your total monthly debt payments (housing costs plus student loans, car payments, credit cards, etc.) should not exceed 36% of your gross monthly income.
Lenders will typically use the lower of these two numbers to determine the maximum monthly payment they will approve. This calculator automatically applies this logic to ensure the estimate is conservative and realistic.
Key Factors Affecting Your Purchasing Power
Several variables impact your maximum home price beyond just your salary:
- Down Payment: A larger down payment reduces the loan amount required, allowing you to buy a more expensive home for the same monthly payment. It also helps avoid Private Mortgage Insurance (PMI).
- Interest Rates: Even a small increase in interest rates can significantly reduce your buying power by increasing the monthly cost of borrowing.
- Existing Debt: High monthly obligations (like car loans) eat into your back-end ratio, directly reducing the amount available for a mortgage.
- Property Taxes & HOA: These are perpetual costs. A home with high taxes or HOA fees will lower the maximum loan amount you can qualify for.
How to Improve Your Affordability
If the result from the calculator is lower than expected, consider paying down high-interest credit card debt to improve your back-end ratio, saving for a larger down payment, or looking in areas with lower property taxes.
function calculateAffordability() {
// 1. Get Inputs
var annualIncome = parseFloat(document.getElementById('mac_income').value);
var monthlyDebts = parseFloat(document.getElementById('mac_debts').value);
var downPayment = parseFloat(document.getElementById('mac_down').value);
var interestRate = parseFloat(document.getElementById('mac_rate').value);
var loanTermYears = parseFloat(document.getElementById('mac_term').value);
var taxRatePercent = parseFloat(document.getElementById('mac_tax').value);
var monthlyHOA = parseFloat(document.getElementById('mac_hoa').value);
// Validation
if (isNaN(annualIncome) || isNaN(interestRate) || isNaN(loanTermYears)) {
alert("Please enter valid numbers for Income, Interest Rate, and Loan Term.");
return;
}
// Handle empty optional fields
if (isNaN(monthlyDebts)) monthlyDebts = 0;
if (isNaN(downPayment)) downPayment = 0;
if (isNaN(taxRatePercent)) taxRatePercent = 0;
if (isNaN(monthlyHOA)) monthlyHOA = 0;
// 2. Constants & Conversions
var grossMonthlyIncome = annualIncome / 12;
var monthlyRate = (interestRate / 100) / 12;
var totalMonths = loanTermYears * 12;
var monthlyTaxRate = (taxRatePercent / 100) / 12;
// Estimate Home Insurance as 0.5% of home price annually
var monthlyInsRate = 0.005 / 12;
// 3. Calculate Max Allowable Monthly Payment based on DTI Rules
// Rule 1: Front-End (Housing expenses <= 28% of gross income)
var limitFrontEnd = grossMonthlyIncome * 0.28;
// Rule 2: Back-End (Total debt 0) {
// 4. Calculate Mortgage Factor (Principal & Interest portion per dollar borrowed)
// Formula: (r(1+r)^n) / ((1+r)^n – 1)
var mortgageFactor = 0;
if (monthlyRate === 0) {
mortgageFactor = 1 / totalMonths;
} else {
mortgageFactor = (monthlyRate * Math.pow(1 + monthlyRate, totalMonths)) / (Math.pow(1 + monthlyRate, totalMonths) – 1);
}
// 5. Solve for Home Price (P)
// Total Monthly Spend (PITI) = (Loan * M_Factor) + (Price * Tax_Rate) + (Price * Ins_Rate)
// Loan = Price – DownPayment
// PITI = ((P – D) * M) + (P * T) + (P * I)
// PITI = (P*M) – (D*M) + (P*T) + (P*I)
// PITI + (D*M) = P * (M + T + I)
// Price = (PITI + (DownPayment * MortgageFactor)) / (MortgageFactor + MonthlyTaxRate + MonthlyInsRate)
var denominator = mortgageFactor + monthlyTaxRate + monthlyInsRate;
var numerator = maxPITI + (downPayment * mortgageFactor);
maxHomePrice = numerator / denominator;
maxLoanAmount = maxHomePrice – downPayment;
// Edge case: If calculated loan is negative (Down payment > Price), Price is just Down Payment?
// Actually, if you have huge downpayment, your affordability is technically infinite relative to income if you don't borrow.
// But this calculator assumes a mortgage structure.
// If MaxLoan is negative, it means the carrying costs (Tax/Ins) of a house costing 'DownPayment'
// might exceed the allowed budget, OR the math implies no loan needed.
if (maxLoanAmount < 0) {
// Simplified fallback: You can afford a house where Taxes+Ins+HOA <= MaxTotalPayment
// Price * (Tax+Ins) + HOA <= MaxTotalPayment
// Price = (MaxTotalPayment – HOA) / (Tax+Ins)
maxHomePrice = (maxTotalPayment – monthlyHOA) / (monthlyTaxRate + monthlyInsRate);
maxLoanAmount = 0;
}
} else {
maxHomePrice = 0;
maxLoanAmount = 0;
}
// Formatting Helper
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
maximumFractionDigits: 0
});
// Update UI
document.getElementById('mac_max_price').innerHTML = formatter.format(maxHomePrice);
document.getElementById('mac_monthly_pay').innerHTML = formatter.format(maxTotalPayment);
document.getElementById('mac_loan_amount').innerHTML = formatter.format(Math.max(0, maxLoanAmount));
// Show which ratio limited the loan
var limitingFactor = (limitFrontEnd < limitBackEnd) ? "28% (Front-End)" : "36% (Back-End)";
if (maxPITI <= 0) limitingFactor = "Debt Too High";
document.getElementById('mac_dti_front').innerHTML = limitingFactor;
// Reveal results
document.getElementById('mac_result_container').style.display = "block";
}