Estimate how much house you can afford based on your income, debts, savings, and desired down payment.
function calculateHouseBudget() {
// Get input values
var monthlyGrossIncome = parseFloat(document.getElementById('monthlyGrossIncome').value);
var totalMonthlyDebts = parseFloat(document.getElementById('totalMonthlyDebts').value);
var desiredMonthlySavings = parseFloat(document.getElementById('desiredMonthlySavings').value);
var availableDownPayment = parseFloat(document.getElementById('availableDownPayment').value);
var targetDownPaymentPercent = parseFloat(document.getElementById('targetDownPaymentPercent').value) / 100; // Convert to decimal
var estimatedAnnualPropertyTaxRate = parseFloat(document.getElementById('estimatedAnnualPropertyTaxRate').value) / 100; // Convert to decimal
var estimatedAnnualHomeInsurance = parseFloat(document.getElementById('estimatedAnnualHomeInsurance').value);
var estimatedMortgageInterestRate = parseFloat(document.getElementById('estimatedMortgageInterestRate').value) / 100; // Convert to decimal
var loanTermYears = parseFloat(document.getElementById('loanTermYears').value);
var resultDiv = document.getElementById('houseBudgetResult');
resultDiv.innerHTML = "; // Clear previous results
// Input validation
if (isNaN(monthlyGrossIncome) || monthlyGrossIncome < 0 ||
isNaN(totalMonthlyDebts) || totalMonthlyDebts < 0 ||
isNaN(desiredMonthlySavings) || desiredMonthlySavings < 0 ||
isNaN(availableDownPayment) || availableDownPayment < 0 ||
isNaN(targetDownPaymentPercent) || targetDownPaymentPercent 1 ||
isNaN(estimatedAnnualPropertyTaxRate) || estimatedAnnualPropertyTaxRate < 0 ||
isNaN(estimatedAnnualHomeInsurance) || estimatedAnnualHomeInsurance < 0 ||
isNaN(estimatedMortgageInterestRate) || estimatedMortgageInterestRate < 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
resultDiv.innerHTML = 'Please enter valid positive numbers for all fields.';
return;
}
// Step 1: Determine Maximum Affordable Monthly Housing Payment (PITI)
// Lender guidelines (28/36 rule)
var maxPITI_28_percent = monthlyGrossIncome * 0.28;
var maxPITI_36_percent_DTI = (monthlyGrossIncome * 0.36) – totalMonthlyDebts;
var recommendedMaxPITI_lender = Math.min(maxPITI_28_percent, maxPITI_36_percent_DTI);
// Personal budget consideration: income after debts and desired savings
var incomeAfterDebtsAndSavings = monthlyGrossIncome – totalMonthlyDebts – desiredMonthlySavings;
// The effective monthly housing budget is the lower of what lenders might approve and what's left after personal savings goals
var effectiveMonthlyHousingBudget = Math.min(recommendedMaxPITI_lender, incomeAfterDebtsAndSavings);
if (effectiveMonthlyHousingBudget <= 0) {
resultDiv.innerHTML = 'Based on your income, debts, and savings goals, your available budget for housing is too low. Consider adjusting your savings or reducing debts.';
return;
}
// Calculate monthly home insurance
var monthlyHomeInsurance = estimatedAnnualHomeInsurance / 12;
// Check if budget can even cover insurance
if (effectiveMonthlyHousingBudget <= monthlyHomeInsurance) {
resultDiv.innerHTML = 'Your estimated monthly housing budget ($' + effectiveMonthlyHousingBudget.toFixed(2) + ') is not enough to cover even the estimated monthly home insurance ($' + monthlyHomeInsurance.toFixed(2) + '). Please adjust your budget or inputs.';
return;
}
// Calculate P&I factor for the loan
var monthlyInterestRate = estimatedMortgageInterestRate / 12;
var numberOfPayments = loanTermYears * 12;
var mpiFactor; // Monthly Principal & Interest factor per dollar of loan
if (monthlyInterestRate === 0) {
mpiFactor = 1 / numberOfPayments; // Simple division if interest is 0
} else {
mpiFactor = (monthlyInterestRate * Math.pow((1 + monthlyInterestRate), numberOfPayments)) / (Math.pow((1 + monthlyInterestRate), numberOfPayments) – 1);
}
// Calculate monthly property tax factor (per dollar of house price)
var monthlyPropertyTaxFactor = estimatedAnnualPropertyTaxRate / 12;
// Step 2: Work backwards from effectiveMonthlyHousingBudget to find the Affordable House Price
// effectiveMonthlyHousingBudget = (Loan Amount * mpiFactor) + (House Price * monthlyPropertyTaxFactor) + monthlyHomeInsurance
// Loan Amount = House Price * (1 – targetDownPaymentPercent)
// effectiveMonthlyHousingBudget – monthlyHomeInsurance = House Price * (1 – targetDownPaymentPercent) * mpiFactor + House Price * monthlyPropertyTaxFactor
// effectiveMonthlyHousingBudget – monthlyHomeInsurance = House Price * [ (1 – targetDownPaymentPercent) * mpiFactor + monthlyPropertyTaxFactor ]
// House Price = (effectiveMonthlyHousingBudget – monthlyHomeInsurance) / [ (1 – targetDownPaymentPercent) * mpiFactor + monthlyPropertyTaxFactor ]
var denominator = ((1 – targetDownPaymentPercent) * mpiFactor) + monthlyPropertyTaxFactor;
if (denominator 0) {
affordableHousePrice_from_downpayment = availableDownPayment / targetDownPaymentPercent;
} else if (targetDownPaymentPercent === 0) {
// If 0% down payment is targeted, the available down payment funds don't limit the price based on percentage.
// The affordableHousePrice_from_budget calculation already correctly handles 0% down.
affordableHousePrice_from_downpayment = Infinity;
}
var finalAffordableHousePrice = Math.min(affordableHousePrice_from_budget, affordableHousePrice_from_downpayment);
if (finalAffordableHousePrice <= 0) {
resultDiv.innerHTML = 'Based on your inputs, an affordable house price could not be determined. Your budget might be too tight, or your desired down payment percentage is too high for your available funds.';
return;
}
// Calculate components for the final affordable house price
var requiredDownPayment = finalAffordableHousePrice * targetDownPaymentPercent;
var loanAmount = finalAffordableHousePrice – requiredDownPayment;
var monthlyPrincipalInterest = loanAmount * mpiFactor;
var monthlyPropertyTax = finalAffordableHousePrice * monthlyPropertyTaxFactor;
var totalMonthlyHousingPayment = monthlyPrincipalInterest + monthlyPropertyTax + monthlyHomeInsurance;
// Display results
var resultsHTML = '
Home Insurance: $' + monthlyHomeInsurance.toFixed(2) + '
';
resultsHTML += '
Total Estimated Monthly Housing Payment: $' + totalMonthlyHousingPayment.toFixed(2) + '
';
resultsHTML += '
';
if (totalMonthlyHousingPayment > effectiveMonthlyHousingBudget + 0.01) { // Allow for minor floating point differences
resultsHTML += 'Note: The calculated total monthly housing payment ($' + totalMonthlyHousingPayment.toFixed(2) + ') is slightly higher than your recommended budget ($' + effectiveMonthlyHousingBudget.toFixed(2) + '). This can happen due to rounding or if the down payment limited the house price more strictly than the monthly budget. Consider adjusting inputs.';
} else if (totalMonthlyHousingPayment < effectiveMonthlyHousingBudget – 0.01) {
resultsHTML += 'Great! Your estimated total monthly housing payment ($' + totalMonthlyHousingPayment.toFixed(2) + ') is within your recommended budget ($' + effectiveMonthlyHousingBudget.toFixed(2) + ').';
}
resultDiv.innerHTML = resultsHTML;
}
Understanding Your House Budget: More Than Just a Mortgage Payment
Buying a home is one of the most significant financial decisions you'll ever make. While it's easy to get caught up in dreaming about your ideal house, a realistic understanding of your house budget is crucial. This isn't just about how much a bank will lend you; it's about how much you can comfortably afford each month without sacrificing your other financial goals, like saving for retirement or emergencies.
Why a House Budget Calculator is Essential
Many people mistakenly believe their house budget is simply the maximum mortgage amount a lender pre-approves them for. However, a true house budget considers a broader range of factors:
Your Income: Your gross monthly income is the foundation.
Your Debts: Existing debt obligations (car loans, student loans, credit cards) reduce the amount of income available for housing.
Your Savings Goals: A responsible budget ensures you can still meet your savings targets (e.g., emergency fund, retirement, future education) even after housing costs.
Down Payment: The amount of cash you have available for a down payment directly impacts your loan amount and, consequently, your monthly mortgage payment.
Ongoing Costs (PITI): Beyond the principal and interest of your mortgage, you'll have property taxes (T) and homeowner's insurance (I). These are often bundled into your monthly mortgage payment, forming what's known as PITI.
Other Homeownership Costs: Don't forget utilities, maintenance, potential HOA fees, and unexpected repairs, which aren't included in PITI but are vital for a complete budget.
The 28/36 Rule: A Lender's Guideline
Lenders often use the "28/36 rule" to assess affordability:
28% Rule (Front-End Ratio): Your total monthly housing costs (PITI) should ideally not exceed 28% of your gross monthly income.
36% Rule (Back-End Ratio): Your total monthly debt payments (including PITI and all other debts like car loans, student loans, and credit card minimums) should not exceed 36% of your gross monthly income.
While these are lender guidelines, our calculator also factors in your personal savings goals to give you a more conservative and sustainable budget.
How This Calculator Works
This House Budget Calculator takes your financial inputs and works backward to estimate an affordable house price and a recommended monthly housing budget. It considers:
Your Capacity: It first determines your maximum comfortable monthly housing payment by considering your gross income, existing debts, and your desired monthly savings. It also applies the common 28/36 lender guidelines to ensure the budget is realistic for mortgage qualification.
Down Payment Impact: It factors in your available cash for a down payment and your target down payment percentage, understanding that a larger down payment can reduce your loan amount and monthly payments.
Total Housing Costs (PITI): It estimates the monthly principal and interest (P&I) based on current interest rates and loan terms, along with estimated property taxes and home insurance.
By combining these elements, the calculator provides a holistic view of what you can truly afford, helping you set realistic expectations and avoid being "house poor."
Example Scenario:
Let's consider a hypothetical individual using the calculator:
Monthly Gross Income: $7,000
Total Monthly Debt Payments: $500 (e.g., car loan, student loan)
Desired Monthly Savings: $1,000
Available Down Payment Funds: $50,000
Target Down Payment Percentage: 20%
Estimated Annual Property Tax Rate: 1.2%
Estimated Annual Home Insurance Cost: $1,800
Estimated Mortgage Interest Rate: 6.8%
Loan Term (Years): 30
Based on these inputs, the calculator would determine:
Recommended Maximum Monthly Housing Budget (PITI): Approximately $1,460. (This is derived from the 28/36 rule and ensuring savings goals are met).
Estimated Affordable House Price: Around $250,000.
Required Down Payment: $50,000 (20% of $250,000).
Estimated Monthly Principal & Interest: ~$1,200
Estimated Monthly Property Tax: ~$250
Estimated Monthly Home Insurance: ~$150
Total Estimated Monthly Housing Payment: ~$1,600
In this example, the individual's available down payment perfectly aligns with the 20% target for the affordable house price. The total estimated monthly housing payment is close to, or slightly above, the recommended budget, indicating a tight but potentially manageable budget. This highlights the importance of adjusting inputs like desired savings or down payment percentage to find a comfortable balance.
Important Considerations:
Interest Rates Fluctuate: The estimated interest rate is just that—an estimate. Actual rates can change.
Property Taxes Vary: Property tax rates can change and are highly dependent on location.
Hidden Costs: Remember closing costs, moving expenses, and ongoing maintenance. These are not included in the PITI calculation but are crucial for your overall budget.
Personal Comfort: The calculator provides guidelines, but your personal comfort level with debt and spending is paramount.
Use this calculator as a powerful tool to guide your home-buying journey, helping you make informed decisions that align with your financial well-being.