Estimated Maximum Monthly Payment (Principal & Interest):$0.00
Understanding Mortgage Affordability
Determining how much home you can afford is a crucial step in the home-buying process.
This calculator helps you estimate your maximum mortgage amount and the maximum home price
you can realistically consider, based on your income, existing debts, and estimated loan
conditions.
Key Factors:
Monthly Income: This is your gross (before tax) income from all sources each month. Lenders use this to gauge your ability to make payments.
Existing Monthly Debt Payments: This includes minimum payments on credit cards, auto loans, student loans, personal loans, and any other recurring debts. These payments reduce the amount of income available for a mortgage.
Down Payment: The upfront cash you pay towards the home purchase. A larger down payment reduces the amount you need to borrow, which can increase your affordability.
Interest Rate: The annual interest rate on the mortgage loan. Higher interest rates mean higher monthly payments for the same loan amount.
Loan Term: The length of the mortgage, typically 15 or 30 years. Longer terms result in lower monthly payments but more interest paid over time.
How it Works:
Lenders often use a debt-to-income (DTI) ratio to assess affordability. A common guideline
is that your total monthly debt payments (including the proposed mortgage PITI – Principal,
Interest, Taxes, and Insurance) should not exceed 36% of your gross monthly income, and
your housing-related debts (mortgage PITI) alone should not exceed 28% of your gross
monthly income.
This calculator simplifies this by first determining your maximum allowable monthly mortgage payment
based on a common guideline (often around 28% of income minus existing debts). It then uses
the mortgage payment formula to calculate the maximum loan amount you can afford with that payment.
Finally, it adds your down payment to this maximum loan amount to estimate the maximum home price.
Disclaimer: This is an estimation tool only. Actual mortgage approval and loan
amounts will depend on a lender's specific underwriting criteria, credit score, property
appraisal, and other factors. It's always recommended to speak with a mortgage professional
for personalized advice.
function calculateMortgageAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var existingDebts = parseFloat(document.getElementById("existingDebts").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var maxMortgageAmountValue = document.getElementById("maxMortgageAmountValue");
var maxHomePriceValue = document.getElementById("maxHomePriceValue");
var estimatedMonthlyPaymentValue = document.getElementById("estimatedMonthlyPaymentValue");
// Clear previous results
maxMortgageAmountValue.textContent = "$0.00";
maxHomePriceValue.textContent = "$0.00";
estimatedMonthlyPaymentValue.textContent = "$0.00″;
// Validate inputs
if (isNaN(monthlyIncome) || isNaN(existingDebts) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) ||
monthlyIncome <= 0 || existingDebts < 0 || downPayment < 0 || interestRate <= 0 || loanTerm <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
// — Calculation Logic —
// Guideline: Max housing payment is typically around 28% of gross income,
// but we must also account for existing debts.
// A more conservative approach considers the total DTI.
// Let's use a common DTI target of 36% for total debt, and estimate the maximum
// P&I payment that fits within that.
var maxTotalDebtPayment = monthlyIncome * 0.36; // Max allowed total monthly debt payments (including P&I, taxes, insurance)
var maxAllowedMonthlyPayment_P_and_I = maxTotalDebtPayment – existingDebts;
// Ensure the calculated monthly payment is not negative
if (maxAllowedMonthlyPayment_P_and_I <= 0) {
alert("Your existing debts are too high to afford a mortgage based on common DTI guidelines.");
return;
}
// Mortgage Payment Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where:
// M = Monthly Payment
// P = Principal Loan Amount
// i = Monthly Interest Rate (Annual Rate / 12)
// n = Total Number of Payments (Loan Term in Years * 12)
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
// Rearrange the formula to solve for P (Principal Loan Amount)
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
var maxLoanAmount = maxAllowedMonthlyPayment_P_and_I * (numerator / denominator);
// Calculate estimated maximum home price
var maxHomePrice = maxLoanAmount + downPayment;
// Display results, formatted as currency
maxMortgageAmountValue.textContent = "$" + maxLoanAmount.toFixed(2);
maxHomePriceValue.textContent = "$" + maxHomePrice.toFixed(2);
estimatedMonthlyPaymentValue.textContent = "$" + maxAllowedMonthlyPayment_P_and_I.toFixed(2);
}
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font-family: sans-serif;
max-width: 800px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 8px;
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