function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById('annualIncome').value);
var monthlyDebts = parseFloat(document.getElementById('monthlyDebts').value);
var downPaymentFunds = parseFloat(document.getElementById('downPaymentFunds').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTerm = parseFloat(document.getElementById('loanTerm').value);
var propertyTaxRate = parseFloat(document.getElementById('propertyTaxRate').value);
var annualHomeInsurance = parseFloat(document.getElementById('annualHomeInsurance').value);
var monthlyHOA = parseFloat(document.getElementById('monthlyHOA').value);
// Input validation
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebts) || monthlyDebts < 0 ||
isNaN(downPaymentFunds) || downPaymentFunds < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(propertyTaxRate) || propertyTaxRate < 0 ||
isNaN(annualHomeInsurance) || annualHomeInsurance < 0 ||
isNaN(monthlyHOA) || monthlyHOA < 0) {
document.getElementById('affordabilityResult').innerHTML = 'Please enter valid positive numbers for all fields.';
return;
}
var monthlyGrossIncome = annualIncome / 12;
var monthlyInterestRate = (interestRate / 100) / 12;
var totalPayments = loanTerm * 12;
var monthlyHomeInsurance = annualHomeInsurance / 12;
// Lender guidelines for DTI (Debt-to-Income)
// Front-end DTI (housing costs only) typically max 28%
// Back-end DTI (housing costs + all other debts) typically max 36%
var maxHousingPayment_28_percent = monthlyGrossIncome * 0.28;
var maxTotalPayment_36_percent = monthlyGrossIncome * 0.36;
var maxHousingPayment_from_backEnd = maxTotalPayment_36_percent – monthlyDebts;
// Use the lower of the two DTI-derived maximum housing payments
var maxAffordableMonthlyHousingPayment = Math.min(maxHousingPayment_28_percent, maxHousingPayment_from_backEnd);
// If maxAffordableMonthlyHousingPayment is negative due to high debts, set to 0
if (maxAffordableMonthlyHousingPayment < 0) {
maxAffordableMonthlyHousingPayment = 0;
}
// Calculate the maximum PITI (Principal, Interest, Taxes, Insurance) payment
// This is the portion of the maxAffordableMonthlyHousingPayment that goes towards PITI
var maxPITI_payment = maxAffordableMonthlyHousingPayment – monthlyHOA;
// If maxPITI_payment is negative, it means HOA alone exceeds affordability, or debts are too high
if (maxPITI_payment < 0) {
document.getElementById('affordabilityResult').innerHTML = 'Your current debts or HOA fees may make homeownership difficult at this income level. Consider reducing debts or increasing income.';
document.getElementById('maxAffordableHomePrice').innerHTML = 'Maximum Affordable Home Price: $0';
document.getElementById('maxLoanAmount').innerHTML = 'Maximum Mortgage Loan Amount: $0';
document.getElementById('maxRecommendedMonthlyHousingPayment').innerHTML = 'Maximum Recommended Monthly Housing Payment: $' + maxAffordableMonthlyHousingPayment.toFixed(2);
document.getElementById('estimatedMonthlyPrincipalInterest').innerHTML = 'Estimated Monthly Principal & Interest: $0';
document.getElementById('estimatedMonthlyPropertyTaxes').innerHTML = 'Estimated Monthly Property Taxes: $0';
document.getElementById('estimatedMonthlyHomeInsurance').innerHTML = 'Estimated Monthly Home Insurance: $' + monthlyHomeInsurance.toFixed(2);
document.getElementById('estimatedMonthlyHOA').innerHTML = 'Estimated Monthly HOA Fees: $' + monthlyHOA.toFixed(2);
document.getElementById('estimatedTotalMonthlyHousingCosts').innerHTML = 'Estimated Total Monthly Housing Costs: $' + (monthlyHomeInsurance + monthlyHOA).toFixed(2) + '';
document.getElementById('actualFrontEndDTI').innerHTML = 'Your Estimated Front-End DTI: ' + ((monthlyHomeInsurance + monthlyHOA) / monthlyGrossIncome * 100).toFixed(2) + '%';
document.getElementById('actualBackEndDTI').innerHTML = 'Your Estimated Back-End DTI: ' + (((monthlyHomeInsurance + monthlyHOA) + monthlyDebts) / monthlyGrossIncome * 100).toFixed(2) + '%';
return;
}
// Formula to calculate maximum loan amount (P) given a maximum PITI payment
// maxPITI_payment = PMT_PI + Monthly_Taxes + Monthly_Insurance
// PMT_PI = P * [i(1+i)^n] / [(1+i)^n – 1]
// Monthly_Taxes = P * (propertyTaxRate / 100) / 12
// So, maxPITI_payment – Monthly_Insurance = P * [i(1+i)^n] / [(1+i)^n – 1] + P * (propertyTaxRate / 100) / 12
// maxPITI_payment – Monthly_Insurance = P * ( [i(1+i)^n] / [(1+i)^n – 1] + (propertyTaxRate / 100) / 12 )
// P = (maxPITI_payment – Monthly_Insurance) / ( [i(1+i)^n] / [(1+i)^n – 1] + (propertyTaxRate / 100) / 12 )
var factor1 = (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, totalPayments)) / (Math.pow(1 + monthlyInterestRate, totalPayments) – 1);
var factor2 = (propertyTaxRate / 100) / 12;
var maxLoanAmount = 0;
if (factor1 + factor2 > 0) { // Avoid division by zero
maxLoanAmount = (maxPITI_payment – monthlyHomeInsurance) / (factor1 + factor2);
}
// If maxLoanAmount is negative, it means even without a loan, taxes/insurance exceed affordability
if (maxLoanAmount 0 && monthlyInterestRate > 0) {
estimatedMonthlyPrincipalInterest = maxLoanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, totalPayments)) / (Math.pow(1 + monthlyInterestRate, totalPayments) – 1);
} else if (maxLoanAmount > 0 && monthlyInterestRate === 0) { // Handle 0 interest rate case
estimatedMonthlyPrincipalInterest = maxLoanAmount / totalPayments;
}
var estimatedMonthlyPropertyTaxes = (maxAffordableHomePrice * (propertyTaxRate / 100)) / 12;
var estimatedTotalMonthlyHousingCosts = estimatedMonthlyPrincipalInterest + estimatedMonthlyPropertyTaxes + monthlyHomeInsurance + monthlyHOA;
var actualFrontEndDTI = (estimatedTotalMonthlyHousingCosts / monthlyGrossIncome) * 100;
var actualBackEndDTI = ((estimatedTotalMonthlyHousingCosts + monthlyDebts) / monthlyGrossIncome) * 100;
// Display results
document.getElementById('maxAffordableHomePrice').innerHTML = 'Maximum Affordable Home Price: $' + maxAffordableHomePrice.toFixed(2) + '';
document.getElementById('maxLoanAmount').innerHTML = 'Maximum Mortgage Loan Amount: $' + maxLoanAmount.toFixed(2);
document.getElementById('maxRecommendedMonthlyHousingPayment').innerHTML = 'Maximum Recommended Monthly Housing Payment (based on DTI): $' + maxAffordableMonthlyHousingPayment.toFixed(2);
document.getElementById('estimatedMonthlyPrincipalInterest').innerHTML = 'Estimated Monthly Principal & Interest: $' + estimatedMonthlyPrincipalInterest.toFixed(2);
document.getElementById('estimatedMonthlyPropertyTaxes').innerHTML = 'Estimated Monthly Property Taxes: $' + estimatedMonthlyPropertyTaxes.toFixed(2);
document.getElementById('estimatedMonthlyHomeInsurance').innerHTML = 'Estimated Monthly Home Insurance: $' + monthlyHomeInsurance.toFixed(2);
document.getElementById('estimatedMonthlyHOA').innerHTML = 'Estimated Monthly HOA Fees: $' + monthlyHOA.toFixed(2);
document.getElementById('estimatedTotalMonthlyHousingCosts').innerHTML = 'Estimated Total Monthly Housing Costs (PITI + HOA): $' + estimatedTotalMonthlyHousingCosts.toFixed(2) + '';
document.getElementById('actualFrontEndDTI').innerHTML = 'Your Estimated Front-End DTI (Housing only): ' + actualFrontEndDTI.toFixed(2) + '%';
document.getElementById('actualBackEndDTI').innerHTML = 'Your Estimated Back-End DTI (Housing + Debts): ' + actualBackEndDTI.toFixed(2) + '%';
}
// Run calculation on page load with default values
window.onload = calculateAffordability;
Understanding How Much House You Can Afford
Buying a home is one of the biggest financial decisions you'll ever make. It's crucial to understand not just what you'd like to spend, but what you can realistically afford. This isn't just about the sticker price of a house; it involves a complex interplay of your income, existing debts, savings, and the ongoing costs of homeownership.
Key Factors Influencing Your Affordability
Our "How Much House Can I Afford" calculator takes several critical factors into account to give you a realistic estimate:
Annual Gross Household Income: This is your total income before taxes and deductions. Lenders use this as the primary basis for determining how much you can borrow.
Total Monthly Debt Payments: This includes payments for car loans, student loans, credit cards, and any other recurring debts. High debt payments reduce the amount of income available for housing.
Available Down Payment Funds: The more you can put down upfront, the less you need to borrow, which directly impacts your monthly mortgage payment and overall affordability.
Estimated Annual Interest Rate: The interest rate on your mortgage significantly affects your monthly principal and interest payment. Even a small difference can mean thousands over the life of the loan.
Loan Term in Years: A shorter loan term (e.g., 15 years) means higher monthly payments but less interest paid overall. A longer term (e.g., 30 years) means lower monthly payments but more interest.
Annual Property Tax Rate: Property taxes are a recurring cost based on the value of your home and vary significantly by location. They are a mandatory part of your monthly housing expense.
Annual Home Insurance Cost: Lenders require homeowners insurance to protect their investment. This is another ongoing monthly cost.
Monthly Homeowners Association (HOA) Fees: If you're buying a condo, townhouse, or a home in a planned community, you'll likely have HOA fees. These cover maintenance of common areas and amenities and are added to your monthly housing costs.
Understanding Debt-to-Income (DTI) Ratios
Lenders primarily use Debt-to-Income (DTI) ratios to assess your ability to manage monthly payments and repay a loan. There are two main types:
Front-End DTI (Housing Ratio): This ratio compares your total monthly housing costs (Principal, Interest, Taxes, Insurance, and HOA fees – often called PITI + HOA) to your gross monthly income. Most lenders prefer this ratio to be no more than 28-31%.
Back-End DTI (Total Debt Ratio): This ratio compares your total monthly housing costs PLUS all other monthly debt payments (car loans, student loans, credit cards, etc.) to your gross monthly income. Lenders typically look for this ratio to be no more than 36-43%.
Our calculator uses these common DTI guidelines to determine your maximum recommended monthly housing payment, ensuring your estimated affordability aligns with what lenders are likely to approve.
Beyond the Calculator: Other Costs to Consider
While this calculator provides a robust estimate of your home affordability, remember that it doesn't include every potential cost associated with buying and owning a home:
Closing Costs: These are fees paid at the closing of a real estate transaction, typically ranging from 2% to 5% of the loan amount.
Utilities: Monthly costs for electricity, gas, water, sewer, internet, etc., can add up significantly.
Maintenance and Repairs: Homes require ongoing upkeep. Budget for unexpected repairs and routine maintenance.
Moving Expenses: The cost of moving your belongings to your new home.
Furnishings and Decor: You might want to buy new furniture or decorate your new space.
Use this calculator as a powerful starting point to understand your financial boundaries. It empowers you to set realistic expectations and plan your home-buying journey with confidence.