Understanding how much house you can afford is a crucial first step in the home-buying process. This mortgage affordability calculator helps you estimate your potential borrowing power based on your income, debts, and desired monthly payment. Remember, this is an estimate, and your actual borrowing capacity will be determined by a lender after a full mortgage application.
Your Estimated Affordability
Enter your details above to see your estimated mortgage affordability.
Understanding Mortgage Affordability
Several factors influence how much mortgage you can qualify for. Lenders typically look at two main ratios: the Debt-to-Income Ratio (DTI) and your ability to handle the monthly payments.
Debt-to-Income Ratio (DTI):
This is a comparison of your monthly debt obligations to your gross monthly income. A common guideline is that your total debt payments (including your potential mortgage) should not exceed 43% of your gross monthly income. Some loan programs may allow for higher DTIs, but this is a widely used benchmark.
The 28/36 Rule (General Guideline):
While not a strict rule for all lenders, the 28/36 rule is a common starting point. It suggests that your housing expenses (PITI – Principal, Interest, Taxes, Insurance) should not exceed 28% of your gross monthly income, and your total debt obligations (including PITI) should not exceed 36% of your gross monthly income.
This calculator focuses on estimating the maximum loan amount you can afford given your desired maximum monthly payment (Principal & Interest), which is a core component of these rules.
How the Calculator Works:
This calculator uses your inputs to estimate a maximum loan amount you could potentially afford. It works backward from your desired maximum monthly mortgage payment (Principal & Interest). It also considers your existing monthly debt to ensure the total debt burden stays within reasonable limits, implicitly accounting for DTI guidelines.
Annual Income to Monthly Income: Your annual income is divided by 12 to get your gross monthly income.
Maximum Proposed Housing Payment: This is the amount you are willing to spend on Principal and Interest each month.
Loan Amount Calculation: Using a standard mortgage payment formula, the calculator determines the maximum loan amount you could borrow to have a monthly payment (P&I) equal to your desired maximum monthly payment, given the interest rate and loan term. The formula used is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly Payment (your maxPayment)
P = Principal Loan Amount (what we are solving for)
n = Total Number of Payments (loan term in years * 12)
Rearranging to solve for P:
P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
Total Affordable Home Price: This is the estimated maximum loan amount plus your down payment.
Affordability Check: The calculator also performs a basic check to see if the total estimated monthly debt (your existing debts + the calculated P&I payment) is within a common DTI guideline (e.g., 43% of gross monthly income).
Disclaimer: This calculator provides an estimate for informational purposes only. It does not constitute financial advice. Your actual mortgage approval and loan terms will depend on a lender's underwriting process, credit score, employment history, and other financial factors.
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 maxPayment = parseFloat(document.getElementById("maxPayment").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// — Input Validation —
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebt) || monthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(maxPayment) || maxPayment 0) {
maxLoanAmount = maxPayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else { // Handle 0% interest rate case (though unlikely for mortgages)
maxLoanAmount = maxPayment * numberOfPayments;
}
var estimatedTotalHomePrice = maxLoanAmount + downPayment;
var estimatedMonthlyMortgagePayment = maxPayment; // Since maxPayment is P&I
// Check total monthly debt against a common DTI guideline (e.g., 43%)
var totalMonthlyObligations = monthlyDebt + estimatedMonthlyMortgagePayment;
var maxAllowedDebt = grossMonthlyIncome * 0.43; // Using 43% DTI
var affordabilityStatus = "";
var affordabilityMessage = "";
if (totalMonthlyObligations > maxAllowedDebt) {
affordabilityStatus = "Potentially Challenging";
affordabilityMessage = "Your estimated total monthly debt ($" + totalMonthlyObligations.toFixed(2) + ") may exceed common lender guidelines (approximately 43% DTI). You might need to reduce your desired monthly payment or existing debts.";
} else {
affordabilityStatus = "Looks Promising";
affordabilityMessage = "Your estimated total monthly debt ($" + totalMonthlyObligations.toFixed(2) + ") appears to be within common lender guidelines (approximately 43% DTI).";
}
// — Display Results —
resultDiv.innerHTML = `
Estimated Maximum Loan Amount: $${maxLoanAmount.toFixed(2)}Estimated Maximum Affordable Home Price (Loan + Down Payment): $${estimatedTotalHomePrice.toFixed(2)}Estimated Monthly Payment (Principal & Interest): $${estimatedMonthlyMortgagePayment.toFixed(2)}Your Estimated Total Monthly Debt (Existing + P&I): $${totalMonthlyObligations.toFixed(2)}Affordability Status:${affordabilityStatus}
${affordabilityMessage}
Note: This calculation excludes property taxes, homeowner's insurance, HOA fees, and potential Private Mortgage Insurance (PMI), which will increase your actual total monthly housing cost.
`;
}
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