Understanding how much mortgage you can afford is a crucial step in the home-buying process. This calculator helps you estimate your maximum affordable loan amount based on your income, debts, and desired monthly payment.
Several factors influence your mortgage affordability:
Gross Monthly Income: This is your income before taxes and other deductions. Lenders typically want your total housing payment (including mortgage principal, interest, property taxes, and homeowner's insurance) to be no more than 28% of your gross monthly income.
Existing Monthly Debt Payments: This includes credit card payments, car loans, student loans, and any other recurring debt obligations. Lenders generally prefer your total debt payments (including your estimated mortgage payment) to be no more than 36% of your gross monthly income.
Down Payment: The amount of money you pay upfront towards the purchase price of the home. A larger down payment reduces the loan amount you need.
Estimated Interest Rate: The annual interest rate on your mortgage loan. Higher interest rates mean higher monthly payments for the same loan amount.
Loan Term: The duration of the mortgage, typically 15 or 30 years. Shorter terms have higher monthly payments but less interest paid over time.
Property Taxes and Homeowner's Insurance: These are essential costs associated with homeownership that are often included in your monthly mortgage payment (PITI – Principal, Interest, Taxes, Insurance).
Use this calculator to get a preliminary estimate of your borrowing power. Remember that this is an estimate, and your actual mortgage approval will depend on a lender's detailed underwriting process.
15 Years
30 Years
function calculateMortgageAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var existingMonthlyDebt = parseFloat(document.getElementById("existingMonthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var annualPropertyTax = parseFloat(document.getElementById("annualPropertyTax").value);
var annualHomeInsurance = parseFloat(document.getElementById("annualHomeInsurance").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(grossMonthlyIncome) || grossMonthlyIncome <= 0 ||
isNaN(existingMonthlyDebt) || existingMonthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(annualPropertyTax) || annualPropertyTax < 0 ||
isNaN(annualHomeInsurance) || annualHomeInsurance < 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Lender's typical DTI ratio limits
var maxHousingPaymentRatio = 0.28; // 28% of gross monthly income for housing
var maxTotalDebtRatio = 0.36; // 36% of gross monthly income for total debt
var maxHousingPayment = grossMonthlyIncome * maxHousingPaymentRatio;
var maxTotalDebtPayment = grossMonthlyIncome * maxTotalDebtRatio;
// Calculate the maximum allowable mortgage payment (P&I only)
// This is the maximum housing payment minus taxes and insurance
var monthlyPropertyTax = annualPropertyTax / 12;
var monthlyHomeInsurance = annualHomeInsurance / 12;
var maxPrincipalAndInterest = maxHousingPayment – monthlyPropertyTax – monthlyHomeInsurance;
// Ensure the P&I payment doesn't exceed the total debt ratio limit
var remainingDebtCapacity = maxTotalDebtPayment – existingMonthlyDebt;
if (remainingDebtCapacity remainingDebtCapacity) {
maxPrincipalAndInterest = remainingDebtPayment;
}
if (maxPrincipalAndInterest 0) {
maxLoanAmount = maxPrincipalAndInterest * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
// Handle 0% interest rate case (though unlikely for mortgages)
maxLoanAmount = maxPrincipalAndInterest * numberOfPayments;
}
// Subtract the down payment to get the estimated maximum affordable home price
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML = "
Estimated Mortgage Affordability
" +
"Maximum Affordable Loan Amount: $" + maxLoanAmount.toFixed(2) + "" +
"Estimated Maximum Home Price (with your down payment): $" + estimatedMaxHomePrice.toFixed(2) + "" +
"Note: This is an estimate. Actual loan approval depends on lender's criteria, credit score, and other factors.";
}