Mortgage Affordability Calculator
Your Estimated Mortgage Affordability
.calculator-container {
font-family: Arial, sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 8px;
background-color: #f9f9f9;
}
.calculator-inputs, .calculator-results {
margin-bottom: 20px;
}
.input-group {
margin-bottom: 15px;
}
.input-group label {
display: block;
margin-bottom: 5px;
font-weight: bold;
}
.input-group input {
width: calc(100% – 12px);
padding: 8px;
border: 1px solid #ccc;
border-radius: 4px;
}
button {
padding: 10px 15px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 16px;
}
button:hover {
background-color: #0056b3;
}
#result {
margin-top: 15px;
font-size: 1.1em;
font-weight: bold;
color: #333;
}
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTermYears) || isNaN(monthlyDebt) ||
annualIncome <= 0 || interestRate < 0 || loanTermYears <= 0 || monthlyDebt < 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Lender's typical debt-to-income (DTI) ratios
// Front-end DTI (housing costs / gross monthly income) typically < 28%
// Back-end DTI (all debt costs / gross monthly income) typically < 36%
var maxFrontEndDTI = 0.28;
var maxBackEndDTI = 0.36;
var grossMonthlyIncome = annualIncome / 12;
var maxTotalMonthlyDebtPayment = grossMonthlyIncome * maxBackEndDTI;
var maxHousingPayment = grossMonthlyIncome * maxFrontEndDTI;
// Calculate maximum allowable monthly mortgage payment (principal and interest)
var maxMortgagePayment = maxTotalMonthlyDebtPayment – monthlyDebt;
// Ensure maxMortgagePayment is not negative (if existing debt is very high)
if (maxMortgagePayment maxHousingPayment) {
maxMortgagePayment = maxHousingPayment;
}
// Calculate the maximum loan amount based on the maximum mortgage payment
// Formula for monthly payment M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where P is the principal loan amount, i is the monthly interest rate, n is the number of months
// We need to solve for P: P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var monthlyInterestRate = interestRate / 100 / 12;
var numberOfMonths = loanTermYears * 12;
var maxLoanAmount = 0;
if (monthlyInterestRate > 0 && numberOfMonths > 0) {
var numerator = Math.pow(1 + monthlyInterestRate, numberOfMonths) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfMonths);
if (denominator > 0) {
maxLoanAmount = maxMortgagePayment * (numerator / denominator);
}
} else if (maxMortgagePayment > 0) { // Handle 0% interest rate case, though rare for mortgages
maxLoanAmount = maxMortgagePayment * numberOfMonths;
}
// The maximum affordable home price is the maximum loan amount plus the down payment
var maxAffordableHomePrice = maxLoanAmount + downPayment;
// Display results
resultDiv.innerHTML =
"Maximum Affordable Home Price:
$" + maxAffordableHomePrice.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "" +
"Estimated Maximum Loan Amount:
$" + maxLoanAmount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "" +
"Estimated Maximum Monthly Mortgage Payment (P&I):
$" + maxMortgagePayment.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "";
}
Understanding Mortgage Affordability
Determining how much home you can afford is a crucial step in the home-buying process. Lenders use a variety of factors to assess your ability to repay a mortgage, with Debt-to-Income (DTI) ratios being one of the most significant. This calculator helps you estimate your potential purchasing power based on common lending guidelines.
Key Concepts:
- Annual Household Income: This is the combined gross income of all borrowers applying for the mortgage before taxes and deductions.
- Down Payment: The amount of money you pay upfront towards the purchase price of the home. A larger down payment reduces the loan amount needed and can improve your borrowing terms.
- Interest Rate: The percentage charged by the lender on the loan amount. This significantly impacts your monthly payment and the total cost of the loan over time.
- Loan Term: The duration over which you will repay the mortgage, typically 15 or 30 years. Longer terms result in lower monthly payments but higher total interest paid.
- Total Monthly Debt Payments: This includes all recurring monthly financial obligations excluding your potential housing costs. Examples include car loans, student loans, credit card minimum payments, and personal loans.
- Debt-to-Income (DTI) Ratio: Lenders use DTI to gauge your ability to manage monthly payments and repay debts. It's calculated by dividing your total monthly debt payments by your gross monthly income.
- Front-End DTI (Housing Ratio): This ratio compares your potential housing costs (principal, interest, property taxes, homeowner's insurance, and HOA dues – often abbreviated as PITI) to your gross monthly income. Lenders typically prefer this to be no more than 28%.
- Back-End DTI (Total Debt Ratio): This ratio compares all your monthly debt obligations (including the PITI of your potential home) to your gross monthly income. Lenders generally want this to be no more than 36%.
How the Calculator Works:
This calculator estimates your maximum affordable home price by working backward from typical DTI limits. It first calculates your gross monthly income. Then, it determines the maximum total monthly debt payments allowed (based on the back-end DTI). By subtracting your existing monthly debt payments from this maximum, it estimates the maximum monthly mortgage payment (principal and interest only) you can afford. Finally, using the provided interest rate and loan term, it calculates the maximum loan amount you could support with that monthly payment, and adds your down payment to arrive at an estimated maximum home price.
Important Considerations:
- This is an estimate: Lender requirements can vary significantly. This calculator does not account for all potential closing costs, property taxes, homeowner's insurance, or HOA fees, which will be part of your actual monthly housing expense (PITI).
- Credit Score: Your credit score plays a major role in determining the interest rate you'll qualify for and the overall loan approval.
- Loan Programs: Different mortgage programs (e.g., FHA, VA, Conventional) have different DTI requirements and down payment options.
- Personal Financial Goals: It's wise to only borrow what you are truly comfortable repaying each month, even if lenders approve you for a higher amount.
Consulting with a mortgage professional is highly recommended for personalized advice and pre-approval.