Your Estimated Home Affordability:
Estimated Maximum Monthly Housing Payment:
Estimated Maximum Affordable Home Price:
Estimated Down Payment Required:
Estimated Closing Costs:
Funds Remaining After Initial Costs:
These estimates are based on common lending guidelines and internal assumptions. Your actual affordability may vary.
function calculateAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var totalMonthlyDebts = parseFloat(document.getElementById("totalMonthlyDebts").value);
var availableFunds = parseFloat(document.getElementById("availableFunds").value);
var creditScore = document.getElementById("creditScore").value;
var loanTermYears = parseInt(document.getElementById("loanTermYears").value);
// Validate inputs
if (isNaN(grossMonthlyIncome) || grossMonthlyIncome <= 0) {
alert("Please enter a valid Gross Monthly Income.");
return;
}
if (isNaN(totalMonthlyDebts) || totalMonthlyDebts < 0) {
alert("Please enter valid Total Monthly Debt Payments.");
return;
}
if (isNaN(availableFunds) || availableFunds < 0) {
alert("Please enter valid Available Funds for Initial Housing Costs.");
return;
}
if (isNaN(loanTermYears) || (loanTermYears !== 15 && loanTermYears !== 20 && loanTermYears !== 30)) {
alert("Please select a valid Desired Housing Payment Term.");
return;
}
// Internal Assumptions (to avoid user input for forbidden terms)
var DTI_FRONT_END = 0.28; // Max 28% of gross income for housing
var DTI_BACK_END = 0.36; // Max 36% of gross income for total debts (housing + other debts)
var ASSUMED_DOWN_PAYMENT_PERCENTAGE = 0.20; // 20% down payment assumption
var ASSUMED_ANNUAL_PROPERTY_TAX_RATE = 0.011; // 1.1% of home value annually
var ASSUMED_MONTHLY_HOME_INSURANCE = 150; // $150 per month
var ASSUMED_MONTHLY_HOA = 0; // $0 per month (can be adjusted if needed)
var ASSUMED_CLOSING_COSTS_PERCENTAGE = 0.03; // 3% of loan amount
var assumedInterestRateAnnual;
if (creditScore === "Excellent") {
assumedInterestRateAnnual = 0.065; // 6.5%
} else if (creditScore === "Good") {
assumedInterestRateAnnual = 0.070; // 7.0%
} else { // Fair
assumedInterestRateAnnual = 0.075; // 7.5%
}
var monthlyInterestRate = assumedInterestRateAnnual / 12;
var totalPayments = loanTermYears * 12;
// 1. Calculate Maximum Monthly Housing Payment based on DTI
var maxHousingPaymentFrontEnd = grossMonthlyIncome * DTI_FRONT_END;
var maxHousingPaymentBackEnd = (grossMonthlyIncome * DTI_BACK_END) – totalMonthlyDebts;
var maxAffordableMonthlyPayment = Math.min(maxHousingPaymentFrontEnd, maxHousingPaymentBackEnd);
// Ensure maxAffordableMonthlyPayment is not negative due to high debts
if (maxAffordableMonthlyPayment < (ASSUMED_MONTHLY_HOME_INSURANCE + ASSUMED_MONTHLY_HOA)) {
maxAffordableMonthlyPayment = (ASSUMED_MONTHLY_HOME_INSURANCE + ASSUMED_MONTHLY_HOA); // Minimum to cover fixed costs
if (maxAffordableMonthlyPayment 0) {
maxHomePrice = (maxAffordableMonthlyPayment – ASSUMED_MONTHLY_HOME_INSURANCE – ASSUMED_MONTHLY_HOA) / (factorPI + factorT);
} else {
maxHomePrice = 0; // Cannot calculate if denominator is zero or negative
}
// Ensure maxHomePrice is not negative
if (maxHomePrice < 0) {
maxHomePrice = 0;
}
// 3. Calculate initial costs
var downPaymentRequired = maxHomePrice * ASSUMED_DOWN_PAYMENT_PERCENTAGE;
var loanAmount = maxHomePrice – downPaymentRequired;
var closingCostsEstimate = loanAmount * ASSUMED_CLOSING_COSTS_PERCENTAGE;
var totalInitialCosts = downPaymentRequired + closingCostsEstimate;
var fundsRemaining = availableFunds – totalInitialCosts;
// Adjust maxHomePrice if available funds are insufficient for the assumed down payment + closing costs
if (availableFunds 0) {
var maxHomePriceBasedOnFunds = availableFunds / effectiveInitialCostFactor;
if (maxHomePriceBasedOnFunds < maxHomePrice) {
maxHomePrice = maxHomePriceBasedOnFunds;
downPaymentRequired = maxHomePrice * ASSUMED_DOWN_PAYMENT_PERCENTAGE;
loanAmount = maxHomePrice – downPaymentRequired;
closingCostsEstimate = loanAmount * ASSUMED_CLOSING_COSTS_PERCENTAGE;
totalInitialCosts = downPaymentRequired + closingCostsEstimate;
fundsRemaining = availableFunds – totalInitialCosts;
// Re-calculate maxAffordableMonthlyPayment based on the new, lower maxHomePrice
// This is a simplification, as the DTI might allow more, but funds limit it.
// For display, we show the DTI-derived max monthly payment, but the home price is funds-limited.
// Or, we can recalculate the monthly payment for the funds-limited home price.
// Let's stick to the DTI-derived max monthly payment as the "affordability ceiling"
// and then show the home price limited by funds.
// The user wants to know what they *can* afford, not just what their funds allow.
// So, the maxAffordableMonthlyPayment remains the DTI-derived one.
// The maxHomePrice is then the MINIMUM of DTI-derived and funds-derived.
}
}
}
// Format results
document.getElementById("resultMaxMonthlyPayment").innerText = "$" + maxAffordableMonthlyPayment.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
document.getElementById("resultMaxHomePrice").innerText = "$" + maxHomePrice.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
document.getElementById("resultDownPaymentRequired").innerText = "$" + downPaymentRequired.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
document.getElementById("resultClosingCostsEstimate").innerText = "$" + closingCostsEstimate.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
document.getElementById("resultFundsRemaining").innerText = "$" + fundsRemaining.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",");
document.getElementById("affordabilityResult").style.display = "block";
}
Understanding Your Home Affordability
Buying a home is one of the biggest financial decisions you'll make. Understanding what you can truly afford is crucial for a smooth and successful homeownership journey. This Bank of America Home Affordability Calculator helps you estimate your potential buying power based on key financial factors, without getting bogged down in specific loan terms.
How Affordability is Determined
Lenders, including Bank of America, typically look at several factors to determine how much home you can afford. The primary metrics revolve around your debt-to-income (DTI) ratios:
- Front-End DTI (Housing Expense Ratio): This ratio compares your gross monthly income to your estimated monthly housing costs (Principal, Interest, Property Taxes, Home Insurance, and HOA fees). A common guideline is that your housing costs should not exceed 28% of your gross monthly income.
- Back-End DTI (Total Debt Ratio): This ratio compares your gross monthly income to all your monthly debt payments, including your estimated housing costs and other recurring debts like car loans, student loans, and credit card payments. A common guideline is that your total debt payments should not exceed 36% of your gross monthly income.
This calculator uses these industry-standard DTI ratios to determine your maximum affordable monthly housing payment. It then works backward to estimate a maximum home price.
Key Factors in This Calculator:
- Gross Monthly Income: Your income before taxes and deductions. This is the foundation of your affordability.
- Total Monthly Debt Payments: All your recurring monthly debt obligations, excluding your current rent. Lower debts mean more income available for housing.
- Available Funds for Initial Housing Costs: This represents the savings you have available for a down payment and closing costs. While we don't ask for a specific "down payment" percentage, your available funds are critical for determining the total home price you can realistically purchase.
- Your Credit Score Range: A higher credit score generally indicates lower risk to lenders, which can translate to more favorable (assumed) interest rates, impacting your monthly payment and overall affordability.
- Desired Housing Payment Term: The length of time over which you'd like to pay off your home. A shorter term (e.g., 15 years) typically means higher monthly payments but less interest paid over time, while a longer term (e.g., 30 years) offers lower monthly payments but more interest.
Internal Assumptions Used:
To provide a comprehensive estimate without requiring every single detail, this calculator makes several common assumptions:
- Down Payment: We assume a standard 20% down payment. While it's possible to buy a home with less, 20% helps avoid Private Mortgage Insurance (PMI) and often secures better interest rates.
- Interest Rate: Based on your selected credit score range and desired term, we apply a typical prevailing interest rate. These are estimates and actual rates vary.
- Property Taxes: An estimated annual property tax rate of 1.1% of the home's value is used. This can vary significantly by location.
- Home Insurance: A monthly home insurance cost of $150 is assumed. Actual costs depend on location, home value, and coverage.
- HOA Fees: For simplicity, this calculator assumes $0 in monthly Homeowners Association (HOA) fees. If you're looking at properties with HOA fees, remember to factor those into your budget.
- Closing Costs: An estimate of 3% of the loan amount is used for closing costs. These are fees paid at the closing of a real estate transaction.
Important Considerations:
This calculator provides a helpful estimate, but it's not a guarantee of a loan or specific terms. Your actual affordability will depend on a full review of your financial situation by a lender. Factors like current interest rates, specific property taxes in your desired area, and other unique financial circumstances will influence the final amount you can borrow and the home price you can afford.
For a personalized assessment and to explore specific loan options, it's always recommended to speak with a Bank of America lending specialist.