How Much House Can I Afford Calculator
Your Affordability Estimate:
function calculateAffordability() {
var annualGrossIncome = parseFloat(document.getElementById('annualGrossIncome').value);
var monthlyDebtPayments = parseFloat(document.getElementById('monthlyDebtPayments').value);
var cashAvailableForInitialPayment = parseFloat(document.getElementById('cashAvailableForInitialPayment').value);
var desiredInitialPaymentPercentage = parseFloat(document.getElementById('desiredInitialPaymentPercentage').value);
var annualPropertyTaxRate = parseFloat(document.getElementById('annualPropertyTaxRate').value);
var annualHomeInsuranceRate = parseFloat(document.getElementById('annualHomeInsuranceRate').value);
var monthlyHOAFees = parseFloat(document.getElementById('monthlyHOAFees').value);
var currentMortgageInterestRate = parseFloat(document.getElementById('currentMortgageInterestRate').value);
var loanTermYears = parseFloat(document.getElementById('loanTermYears').value);
// Input validation
if (isNaN(annualGrossIncome) || annualGrossIncome < 0 ||
isNaN(monthlyDebtPayments) || monthlyDebtPayments < 0 ||
isNaN(cashAvailableForInitialPayment) || cashAvailableForInitialPayment < 0 ||
isNaN(desiredInitialPaymentPercentage) || desiredInitialPaymentPercentage < 0 ||
isNaN(annualPropertyTaxRate) || annualPropertyTaxRate < 0 ||
isNaN(annualHomeInsuranceRate) || annualHomeInsuranceRate < 0 ||
isNaN(monthlyHOAFees) || monthlyHOAFees < 0 ||
isNaN(currentMortgageInterestRate) || currentMortgageInterestRate < 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
document.getElementById('affordabilityResult').innerHTML = 'Please enter valid positive numbers for all fields.';
return;
}
var monthlyIncome = annualGrossIncome / 12;
var monthlyRate = (currentMortgageInterestRate / 100) / 12;
var numPayments = loanTermYears * 12;
var mortgageFactor;
if (monthlyRate === 0) {
mortgageFactor = 1 / numPayments; // Simple division if interest rate is 0
} else {
mortgageFactor = (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
}
// DTI Limits (common lender guidelines)
var maxHousingPaymentFE = monthlyIncome * 0.28; // Front-end DTI (housing costs only)
var maxHousingPaymentBE = (monthlyIncome * 0.36) – monthlyDebtPayments; // Back-end DTI (housing + other debts)
var maxTotalMonthlyHousingPaymentFromDTI = Math.min(maxHousingPaymentFE, maxHousingPaymentBE);
if (maxTotalMonthlyHousingPaymentFromDTI 0) { // Avoid division by zero
maxAffordableHomePriceFromDTI = numerator / denominator;
}
// Constraint from desired initial payment percentage
var maxAffordableHomePriceFromDPTarget = Infinity;
if (desiredInitialPaymentPercentage > 0) {
maxAffordableHomePriceFromDPTarget = cashAvailableForInitialPayment / (desiredInitialPaymentPercentage / 100);
} else if (cashAvailableForInitialPayment === 0) {
maxAffordableHomePriceFromDPTarget = 0; // If no cash and no percentage, effectively 0 affordability
}
// The actual maximum affordable home price is the most restrictive of the two
var maxAffordableHomePrice = Math.min(maxAffordableHomePriceFromDTI, maxAffordableHomePriceFromDPTarget);
if (maxAffordableHomePrice < 0) {
maxAffordableHomePrice = 0; // Ensure it's not negative
}
// Calculate derived outputs based on the final maxAffordableHomePrice
var loanAmount = maxAffordableHomePrice – cashAvailableForInitialPayment;
if (loanAmount 0) ? (totalMonthlyHousingCost / monthlyIncome) * 100 : 0;
var backEndDTI = (monthlyIncome > 0) ? ((totalMonthlyHousingCost + monthlyDebtPayments) / monthlyIncome) * 100 : 0;
var actualDownPaymentPercentage = (maxAffordableHomePrice > 0) ? (cashAvailableForInitialPayment / maxAffordableHomePrice) * 100 : 0;
// Display results
document.getElementById('maxHomePrice').innerHTML = '
Maximum Affordable Home Price: $' + maxAffordableHomePrice.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + '';
document.getElementById('estimatedMonthlyHousingCost').innerHTML = 'Estimated Total Monthly Housing Cost (PITI + HOA): $' + totalMonthlyHousingCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('estimatedMonthlyP_I').innerHTML = ' – Estimated Monthly Principal & Interest: $' + estimatedMonthlyP_I.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('estimatedMonthlyTaxes').innerHTML = ' – Estimated Monthly Property Taxes: $' + estimatedMonthlyTaxes.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('estimatedMonthlyInsurance').innerHTML = ' – Estimated Monthly Home Insurance: $' + estimatedMonthlyInsurance.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('estimatedMonthlyHOA').innerHTML = ' – Estimated Monthly HOA Fees: $' + monthlyHOAFees.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('frontEndDTI').innerHTML = 'Estimated Front-End DTI (Housing Ratio): ' + frontEndDTI.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + '%';
document.getElementById('backEndDTI').innerHTML = 'Estimated Back-End DTI (Total Debt Ratio): ' + backEndDTI.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + '%';
document.getElementById('downPaymentPercentage').innerHTML = 'Your Initial Home Payment Percentage: ' + actualDownPaymentPercentage.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + '%';
if (maxAffordableHomePrice <= 0) {
document.getElementById('affordabilityResult').innerHTML = 'Based on your inputs, it appears you may not be able to afford a home at this time, or your desired initial payment percentage is too high for your available cash.';
}
}
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 calculator helps you estimate your maximum affordable home price by considering your income, debts, savings, and potential housing costs.
Key Factors in Home Affordability
Several factors come into play when determining your home-buying power. Lenders use specific ratios and guidelines to assess your financial health and ability to repay a loan. Here's a breakdown:
1. Your Annual Gross Income
This is your total income before taxes and deductions. It's the foundation of your affordability, as lenders use it to calculate how much of your income can go towards housing and other debts.
2. Total Monthly Debt Payments
This includes recurring monthly payments for car loans, student loans, credit cards, and any other installment or revolving debt. It's important to exclude your current rent payment, as that will be replaced by your future housing costs.
3. Cash Available for Initial Home Payment
This is the amount of money you have saved up to put down on a home. A larger initial payment can reduce your loan amount, lower your monthly payments, and potentially help you avoid private mortgage insurance (PMI).
4. Desired Initial Home Payment Percentage
While you might have a specific amount of cash saved, you might also have a target percentage you wish to put down (e.g., 20% to avoid PMI). This calculator considers both your available cash and your desired percentage to give you a realistic maximum home price.
5. Estimated Property Taxes and Home Insurance
These are ongoing costs that are typically included in your monthly mortgage payment (as part of an escrow account). Property taxes are assessed by local governments, and home insurance protects your investment. Both are usually calculated as a percentage of the home's value.
6. Estimated Monthly Homeowners Association (HOA) Fees
If you're considering a condo, townhouse, or a home in a planned community, you'll likely pay HOA fees. These cover maintenance of common areas and amenities and are a fixed monthly expense.
7. Estimated Mortgage Interest Rate and Loan Term
Even though this isn't a loan calculator, the interest rate and loan term (e.g., 15 or 30 years) are critical for estimating your monthly principal and interest (P&I) payment, which is a major component of your total housing cost.
Understanding Debt-to-Income (DTI) Ratios
Lenders primarily use two DTI ratios to determine your borrowing capacity:
- Front-End DTI (Housing Ratio): This ratio compares your total monthly housing costs (Principal, Interest, Taxes, Insurance, and HOA – often called PITI + HOA) to your gross monthly income. Lenders typically 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. Most lenders look for this ratio to be no higher than 36-43%.
Our calculator uses conservative DTI limits (28% for front-end and 36% for back-end) to give you a realistic estimate of what lenders might approve.
How the Calculator Works
This tool takes your financial inputs and works backward from lender guidelines to determine the maximum home price you can afford. It considers:
- Your maximum allowable monthly housing payment based on DTI ratios.
- The portion of that payment that can go towards principal and interest after accounting for estimated taxes, insurance, and HOA fees.
- The maximum loan amount you can qualify for with that principal and interest payment, given the interest rate and loan term.
- Your available cash for an initial payment, adding it to the maximum loan amount to arrive at the total home price.
- It also factors in your desired initial payment percentage, ensuring that your available cash meets that target for the calculated home price.
Use this calculator as a starting point to understand your budget. Always consult with a financial advisor and a mortgage professional for personalized advice.