Dave Ramsey Mortgage Calculator

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Dave Ramsey Mortgage Calculator
Calculate Monthly Payment & Ramsey FitCalculate Ramsey Home Affordability
Ramsey Mortgage Analysis:
Please enter your values and click calculate.
function calculateMortgage(){var price=parseFloat(document.getElementById('home_price').value);var down=parseFloat(document.getElementById('down_payment').value);var rate=parseFloat(document.getElementById('interest_rate').value)/100/12;var term=parseFloat(document.getElementById('loan_term').value)*12;var income=parseFloat(document.getElementById('monthly_income').value);var taxIns=parseFloat(document.getElementById('tax_ins').value);if(isNaN(price)||isNaN(down)||isNaN(rate)||isNaN(term)||isNaN(income)||isNaN(taxIns)){alert('Please fill in all fields with valid numbers');return;}var principal=price-down;var pmt=0;if(rate===0){pmt=principal/term;}else{pmt=principal*(rate*Math.pow(1+rate,term))/(Math.pow(1+rate,term)-1);}var totalMonthly=pmt+taxIns;var percentOfIncome=(totalMonthly/income)*100;var statusColor=percentOfIncome15){ramseyAdvice+="
⚠️ Warning: Dave Ramsey recommends a 15-year fixed-rate mortgage ONLY.";}if(percentOfIncome>25){ramseyAdvice+="
⚠️ Warning: This payment is "+percentOfIncome.toFixed(1)+"% of your take-home pay. Dave recommends staying below 25%.";}if((down/price)<0.1){ramseyAdvice+="
⚠️ Warning: A 10% minimum down payment is required; 20% is preferred to avoid PMI.";}var output="
";output+="Monthly Principal & Interest: $"+pmt.toFixed(2)+"
";output+="Total Monthly Payment (PITI): $"+totalMonthly.toFixed(2)+"
";output+="Percentage of Take-Home Pay: "+percentOfIncome.toFixed(1)+"%
";output+=ramseyAdvice;output+="
";document.getElementById('result_summary').innerHTML=output;}

Using the Dave Ramsey Mortgage Calculator

The dave ramsey mortgage calculator is designed specifically for those following the "Baby Steps" or the Ramsey way of financial freedom. Unlike standard bank calculators that tell you the maximum you *can* borrow, this tool tells you how much you *should* borrow to stay financially secure. It focuses on three primary pillars: a 15-year fixed-rate term, a strong down payment, and a monthly payment that doesn't eat your entire paycheck.

Home Price
The total purchase price of the property you are looking to buy.
Down Payment
The amount of cash you are paying upfront. Dave recommends at least 10%, but 20% is ideal to avoid Private Mortgage Insurance (PMI).
Monthly Take-Home Pay
Your actual net pay after taxes and insurance are deducted from your paycheck.

How the Ramsey Mortgage Formula Works

The math behind this dave ramsey mortgage calculator combines the standard amortization formula with the "25% Rule." The primary goal is to ensure your "PITI" (Principal, Interest, Taxes, and Insurance) remains manageable.

Max Payment = Monthly Take-Home Pay × 0.25

  • 15-Year Fixed Rate: Dave Ramsey adamantly opposes 30-year mortgages because of the massive amount of interest paid over time.
  • 25% Cap: Keeping your payment at or below 25% of your take-home pay ensures you have enough cash flow for Baby Step 4 (investing 15%) and other living expenses.
  • Escrow Inclusion: Unlike some calculators, we include property taxes and homeowners insurance in the calculation, as these are mandatory parts of your monthly housing cost.

Calculation Example

Scenario: The Miller family brings home $7,000 a month after taxes. They have saved $50,000 for a down payment and found a home for $250,000 at a 6% interest rate on a 15-year term.

Step-by-step solution:

  1. Loan Amount: $250,000 – $50,000 = $200,000
  2. Monthly P&I: $1,687.71 (Calculated using the 15-year fixed rate)
  3. Taxes & Insurance: Estimated $350.00/month
  4. Total Monthly Payment: $1,687.71 + $350.00 = $2,037.71
  5. Check Ramsey Rule: $2,037.71 / $7,000 = 29.1%
  6. Result: This home is too expensive for the Millers according to the Ramsey plan (it exceeds the 25% limit).

Common Questions

Why only a 15-year mortgage?

A 15-year mortgage saves you tens, sometimes hundreds of thousands of dollars in interest compared to a 30-year mortgage. It also forces you to pay the home off much faster, which aligns with the goal of being completely debt-free.

What if I can't find a home for 25% of my income?

If you live in a high-cost-of-living area, Dave's advice remains the same: save a larger down payment or increase your income. Taking on a larger mortgage payment creates "house poverty," where you have a nice home but no money for anything else.

Is the 25% rule based on gross or net income?

It is based on net income (take-home pay). Standard bank guidelines often use gross income (before taxes), but the Ramsey plan uses take-home pay because that is the actual amount of money hitting your bank account to pay bills.

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