function calculateAffordability() {
// Get Inputs
var annualIncome = parseFloat(document.getElementById("annualIncome").value) || 0;
var monthlyDebts = parseFloat(document.getElementById("monthlyDebts").value) || 0;
var downPayment = parseFloat(document.getElementById("downPayment").value) || 0;
var interestRate = parseFloat(document.getElementById("interestRate").value) || 0;
var loanTermYears = parseInt(document.getElementById("loanTerm").value) || 30;
var dtiRatio = parseFloat(document.getElementById("dtiRatio").value) || 36;
var propertyTaxYearly = parseFloat(document.getElementById("propertyTax").value) || 0;
var insuranceYearly = parseFloat(document.getElementById("homeInsurance").value) || 0;
// Basic validation
if (annualIncome <= 0) {
alert("Please enter a valid annual income.");
return;
}
// Calculations
var monthlyIncome = annualIncome / 12;
var maxTotalMonthlyAllowed = monthlyIncome * (dtiRatio / 100);
// Subtract existing debts to find room for new mortgage
var maxMortgagePaymentAllowed = maxTotalMonthlyAllowed – monthlyDebts;
// Monthly Tax and Insurance burden
var monthlyTaxAndIns = (propertyTaxYearly + insuranceYearly) / 12;
// Amount remaining for Principal & Interest (P&I)
var availableForPI = maxMortgagePaymentAllowed – monthlyTaxAndIns;
var maxHomePrice = 0;
var loanAmount = 0;
var monthlyPI = 0;
// If debts are too high, affordability is zero
if (availableForPI <= 0) {
maxHomePrice = 0;
loanAmount = 0;
monthlyPI = 0;
// Force values to 0 for display
availableForPI = 0;
monthlyTaxAndIns = 0; // If they can't afford P&I, they can't afford the house context
maxMortgagePaymentAllowed = 0;
} else {
// Calculate Loan Amount from P&I using Amortization Formula
// P = (r * PV) / (1 – (1+r)^-n)
// PV = P * (1 – (1+r)^-n) / r
var monthlyRate = (interestRate / 100) / 12;
var numPayments = loanTermYears * 12;
if (monthlyRate === 0) {
// Simple division if 0% interest
loanAmount = availableForPI * numPayments;
} else {
loanAmount = availableForPI * (1 – Math.pow(1 + monthlyRate, -numPayments)) / monthlyRate;
}
maxHomePrice = loanAmount + downPayment;
monthlyPI = availableForPI;
}
// Display Results
var resultDiv = document.getElementById("result");
resultDiv.style.display = "block";
document.getElementById("maxHomePrice").innerHTML = "$" + Math.floor(maxHomePrice).toLocaleString();
document.getElementById("totalMonthlyPayment").innerHTML = "$" + maxMortgagePaymentAllowed.toFixed(2);
document.getElementById("monthlyPI").innerHTML = "$" + monthlyPI.toFixed(2);
document.getElementById("monthlyTaxIns").innerHTML = "$" + monthlyTaxAndIns.toFixed(2);
document.getElementById("loanAmountResult").innerHTML = "$" + Math.floor(loanAmount).toLocaleString();
document.getElementById("downPaymentResult").innerHTML = "$" + downPayment.toLocaleString();
}
How Much House Can You Really Afford?
Determining your budget is the first step in the home buying process. This Mortgage Affordability Calculator helps you estimate a realistic home price based on your income, existing debts, and the current economic environment. Unlike simple repayment calculators, this tool works backward from your financial limits to find a safe purchasing price.
Understanding the Key Metrics
To get the most accurate result, it is helpful to understand the inputs used in mortgage underwriting:
Debt-to-Income (DTI) Ratio: This is the most critical factor lenders check. It is the percentage of your gross monthly income that goes toward paying debts. The calculator defaults to 36%, a standard limit for many conventional loans.
Front-end Ratio: Housing costs only (usually max 28%).
Back-end Ratio: Housing costs + credit cards + car loans (usually max 36-43%).
Down Payment: The cash you pay upfront. A higher down payment reduces the loan amount, which lowers monthly interest costs and increases the total home price you can afford.
Taxes & Insurance: Often overlooked by first-time buyers, property taxes and homeowners insurance are added to your monthly mortgage bill (escrow). These reduce the amount of money left over for the actual loan principal and interest.
The 28/36 Rule explained
Many financial advisors and lenders adhere to the "28/36 rule" for home affordability. This rule suggests that:
Your household expenses (mortgage, tax, insurance) should not exceed 28% of your gross monthly income.
Your total debt (household expenses + other debts) should not exceed 36% of your gross monthly income.
If your calculator results show a lower home price than expected, check your monthly debts. High student loan payments or credit card bills significantly reduce your borrowing power because they consume the "Back-end" DTI space that would otherwise be used for a mortgage.
How Interest Rates Impact Affordability
Even a small change in interest rates can drastically alter your buying power. For example, on a 30-year fixed loan, an increase from 6% to 7% doesn't just increase your payment—it lowers the maximum loan amount you qualify for by roughly 10%. When rates are high, a larger down payment is often the best strategy to maintain your target price range.