This calculator helps you estimate how much house you can afford based on your income, debts, and estimated mortgage costs.
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial first step in the home-buying process. It's not just about the sticker price of the home; it's about understanding all the costs involved and ensuring they fit comfortably within your budget. This mortgage affordability calculator is designed to give you a realistic estimate.
Key Factors in Affordability:
Annual Household Income: This is the primary driver of your borrowing power. Lenders look at your total income to assess your ability to repay a loan.
Existing Monthly Debt Payments: Lenders consider your debt-to-income ratio (DTI). This ratio compares your total monthly debt payments (including the potential new mortgage payment) to your gross monthly income. A lower DTI generally makes you a more attractive borrower. Our calculator accounts for your existing debts to give you a more accurate picture.
Down Payment: A larger down payment reduces the amount you need to borrow, lowering your monthly payments and potentially helping you avoid private mortgage insurance (PMI).
Interest Rate: Even a small difference in interest rates can significantly impact your monthly payment and the total interest paid over the life of the loan.
Loan Term: A shorter loan term (e.g., 15 years) means higher monthly payments but less total interest paid. A longer term (e.g., 30 years) results in lower monthly payments but more total interest paid.
Property Taxes and Homeowners Insurance: These are often included in your monthly mortgage payment as part of an escrow account. They are essential costs to factor in.
HOA Fees: If you're buying a property in a community with a homeowners association, these monthly fees are an additional cost to consider.
How the Calculator Works:
This calculator uses a common guideline that your total housing costs (principal, interest, property taxes, homeowners insurance, and HOA fees – often called PITI-HOA) should not exceed a certain percentage of your gross monthly income. Additionally, your total debt obligations (housing costs + other monthly debts) should also stay within acceptable DTI limits (often around 43% for conventional loans, though this can vary). The calculator estimates your maximum loan amount based on these principles and then adds your down payment to estimate your maximum affordable home price.
Disclaimer: This calculator provides an estimate only and should not be considered financial advice. Your actual borrowing capacity will be determined by a lender after a full review of your financial situation.
function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var propertyTaxes = parseFloat(document.getElementById("propertyTaxes").value);
var homeownersInsurance = parseFloat(document.getElementById("homeownersInsurance").value);
var hoaFees = parseFloat(document.getElementById("hoaFees").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) || isNaN(propertyTaxes) || isNaN(homeownersInsurance) || isNaN(hoaFees)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// Common lender guidelines:
// Housing costs (PITI + HOA) typically 28% of gross monthly income
// Total debt (PITI + HOA + other debts) typically 36% of gross monthly income
// We'll use a more flexible approach by aiming for a max monthly payment that allows for DTI below a certain threshold and ensures affordability.
var grossMonthlyIncome = annualIncome / 12;
var maxHousingPaymentTarget = grossMonthlyIncome * 0.28; // Target for PITI + HOA
var maxTotalDebtTarget = grossMonthlyIncome * 0.36; // Target for PITI + HOA + Other Debts
// Calculate max affordable PITI + HOA based on total debt limit
var maxPitiHoaFromTotalDebt = maxTotalDebtTarget – monthlyDebt;
// The actual max PITI + HOA is the lower of the two targets
var maxPitiHoa = Math.min(maxHousingPaymentTarget, maxPitiHoaFromTotalDebt);
// Ensure maxPitiHoa is not negative
if (maxPitiHoa < 0) {
resultDiv.innerHTML = "Based on your income and existing debts, you may not be able to afford a mortgage at this time. Consider reducing debt or increasing income.";
return;
}
// Estimate monthly property taxes, insurance, and HOA fees
var monthlyPropertyTaxes = propertyTaxes / 12;
var monthlyHomeownersInsurance = homeownersInsurance / 12;
var monthlyHoaFees = hoaFees; // Already monthly
var estimatedMonthlyCosts = monthlyPropertyTaxes + monthlyHomeownersInsurance + monthlyHoaFees;
// Calculate maximum affordable principal and interest payment
var maxPrincipalInterestPayment = maxPitiHoa – estimatedMonthlyCosts;
if (maxPrincipalInterestPayment 0) {
// Formula for maximum loan amount from monthly payment:
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Rearranged for P (Principal/Loan Amount):
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
maxLoanAmount = maxPrincipalInterestPayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else {
// If interest rate is 0, loan amount is simply the payment * number of payments
maxLoanAmount = maxPrincipalInterestPayment * numberOfPayments;
}
var affordableHomePrice = maxLoanAmount + downPayment;
// Format results
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedAffordableHomePrice = affordableHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxPrincipalInterestPayment = maxPrincipalInterestPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxPitiHoa = maxPitiHoa.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = `