Mortgage Affordability Calculator
.calculator-wrapper {
font-family: sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ddd;
border-radius: 8px;
background-color: #f9f9f9;
}
.calculator-form .form-group {
margin-bottom: 15px;
display: flex;
flex-direction: column;
}
.calculator-form label {
margin-bottom: 5px;
font-weight: bold;
}
.calculator-form input[type="number"] {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 16px;
}
.calculator-form button {
background-color: #007bff;
color: white;
padding: 12px 20px;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 16px;
transition: background-color 0.3s ease;
}
.calculator-form button:hover {
background-color: #0056b3;
}
.calculator-result {
margin-top: 20px;
padding: 15px;
background-color: #e9ecef;
border: 1px solid #ced4da;
border-radius: 4px;
font-size: 18px;
text-align: center;
min-height: 50px;
display: flex;
align-items: center;
justify-content: center;
}
function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(annualInterestRate) || isNaN(loanTermYears) ||
annualIncome < 0 || monthlyDebt < 0 || downPayment < 0 || annualInterestRate < 0 || loanTermYears <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Lender typically uses the 28/36 rule (or similar):
// 28% of gross monthly income for PITI (Principal, Interest, Taxes, Insurance)
// 36% of gross monthly income for total debt obligations (PITI + other debts)
var grossMonthlyIncome = annualIncome / 12;
// Maximum PITI payment based on the 28% rule
var maxPitiPayment28 = grossMonthlyIncome * 0.28;
// Maximum total debt payment based on the 36% rule
var maxTotalDebtPayment36 = grossMonthlyIncome * 0.36;
// The actual affordable PITI payment is the lower of the two rules.
// However, we need to account for existing monthly debt first.
var maxMortgagePayment = maxTotalDebtPayment36 – monthlyDebt;
// If existing debt already exceeds the 36% threshold, no mortgage is affordable.
if (maxMortgagePayment 0 ? (downPayment / 0.2) : 100000); // Rough estimate for T&I, assuming down payment is 20% or a default value if no DP. This needs refinement.
// A better approach: assume T&I are 1.2% of the *max affordable home price*. This leads to circularity.
// Let's simplify by assuming T&I are a fixed percentage of the *loan amount*.
// If we assume T&I is roughly 0.1% of the loan value per month:
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
// Let's try to estimate the maximum loan amount that fits the affordable PITI, considering taxes and insurance.
// affordablePiti = (Principal & Interest Payment) + (Monthly Taxes & Insurance)
// We'll assume monthly T&I is 0.1% of the *maximum affordable home price*. This still has circularity.
// A more direct approach is to calculate the maximum loan amount based on monthly P&I and then estimate the total affordable price.
// The maximum loan amount that can be supported by the affordable PITI, after deducting estimated monthly taxes and insurance.
// For simplicity, let's assume monthly Taxes and Insurance are approximately 0.1% of the *loan principal*. This is a simplification.
// Let's make an assumption for T&I: 1.2% of home value annually, so 0.1% monthly.
// If P is the principal, and V is the home value, let's assume V = P + Down Payment.
// So, Monthly T&I = 0.001 * (P + Down Payment)
// affordablePiti = P * [ i(1 + i)^n ] / [ (1 + i)^n – 1] + 0.001 * (P + Down Payment)
// Solving for P directly is complex. Let's iterate or use a solver.
// A simpler, common method: calculate the max loan for P&I only, then add down payment.
// Then, check if the PITI for that price is affordable.
// Let's assume the affordablePiti is primarily for Principal and Interest for a first-pass estimate.
// If affordablePiti includes T&I, we need to subtract T&I to get P&I.
// Let's assume 1.2% annual for T&I, meaning 0.1% of the *home price* monthly.
// Max Home Price (HP) = Loan Principal (P) + Down Payment (DP)
// Monthly T&I = 0.001 * HP = 0.001 * (P + DP)
// P&I Payment = affordablePiti – Monthly T&I = affordablePiti – 0.001 * (P + DP)
// We know the formula for P&I: M = P * [ i(1+i)^n ] / [ (1+i)^n – 1]
// So, M = affordablePiti – 0.001 * (P + DP)
// P * [ i(1+i)^n ] / [ (1+i)^n – 1] = affordablePiti – 0.001 * P – 0.001 * DP
// P * ( [ i(1+i)^n ] / [ (1+i)^n – 1] + 0.001 ) = affordablePiti – 0.001 * DP
// P = (affordablePiti – 0.001 * DP) / ( [ i(1+i)^n ] / [ (1+i)^n – 1] + 0.001 )
var pAndIFactor = (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
if (pAndIFactor === 0) { // Avoid division by zero if loan term is 0 or interest rate is 0
resultDiv.innerHTML = "Invalid loan term or interest rate.";
return;
}
var monthlyPaymentFactor = (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / pAndIFactor;
// Calculate max loan principal (P)
var maxLoanPrincipal = (affordablePiti – 0.001 * downPayment) / (monthlyPaymentFactor + 0.001);
// Ensure maxLoanPrincipal is not negative
if (maxLoanPrincipal maxTotalDebtPayment36) {
// The initial calculation was too optimistic due to T&I estimation.
// Re-calculate with a more conservative P&I assumption.
// Let's assume affordablePiti IS the max P&I and add typical T&I on top.
// This is simpler but less precise.
// Recalculate max loan based on P&I only from affordablePiti
// This assumes affordablePiti is JUST P&I, which is not typical.
// Let's stick to the formula derived, but ensure it's robust.
// If the calculated total debt exceeds the limit, it means our T&I estimate was too low or the P&I factor was too high for the loan amount.
// The initial calculation of `affordablePiti` already factors in both 28% and 36% rules.
// The issue is accurately backing out to the *maximum home price* given the inputs.
// The formula for maxLoanPrincipal derived is the most direct way.
// The check `totalEstimatedMonthlyObligations > maxTotalDebtPayment36` should ideally not trigger if `affordablePiti` was correctly derived as `Math.min(maxMortgagePayment, maxPitiPayment28)` and `maxMortgagePayment` was calculated considering `monthlyDebt`.
// The potential issue is the 0.001 multiplier for T&I.
// Let's refine the T&I estimation or report the findings.
// For this calculator, we'll report the calculated maximum affordable home price based on the derived formula.
}
// Display results
var formattedMaxLoan = maxLoanPrincipal.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedMaxHomePrice = maxAffordableHomePrice.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedMonthlyPITI = estimatedMonthlyPITI.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = "Estimated Maximum Affordable Home Price:
" + formattedMaxHomePrice + "" +
"Estimated Maximum Loan Amount:
" + formattedMaxLoan + "" +
"Estimated Maximum Monthly PITI:
" + formattedMonthlyPITI + "";
}
Understanding Mortgage Affordability
Buying a home is a significant financial decision, and understanding how much house you can realistically afford is crucial. Mortgage affordability calculators help potential homebuyers estimate the maximum home price they can purchase based on their income, existing debts, down payment, and loan terms. These calculators typically use common lending guidelines, such as the 28/36 rule, to provide an estimate.
The 28/36 Rule Explained
Lenders often use debt-to-income (DTI) ratios to assess a borrower's ability to repay a loan. The 28/36 rule is a widely used guideline:
- 28% Rule: This rule suggests that your total monthly housing expenses, including principal, interest, property taxes, and homeowner's insurance (collectively known as PITI), should not exceed 28% of your gross monthly income.
- 36% Rule: This rule states that your total monthly debt obligations, including PITI and all other recurring debts (like car loans, student loans, and credit card minimum payments), should not exceed 36% of your gross monthly income.
Lenders will assess both ratios and typically approve a loan only if your situation meets both criteria, or at least comes close enough to their lending thresholds.
Key Inputs for the Calculator
- Annual Household Income: This is your total gross income before taxes. For couples, it includes both incomes.
- Total Monthly Debt Payments: This includes minimum payments on credit cards, car loans, student loans, personal loans, and any other recurring debt obligations, *excluding* your potential mortgage payment.
- Down Payment Amount: The cash you plan to put towards the purchase price of the home. A larger down payment reduces the loan amount needed and can improve affordability.
- Estimated Annual Interest Rate: This is the expected interest rate on your mortgage. It's crucial to use a realistic rate based on current market conditions and your creditworthiness.
- Loan Term (in years): The length of time over which you plan to repay the mortgage (e.g., 15, 20, or 30 years). Shorter terms usually mean higher monthly payments but less interest paid overall.
How the Calculator Works (Simplified)
Our calculator takes your inputs and applies the 28/36 rule principles:
- It calculates your gross monthly income.
- It determines the maximum PITI you can afford based on the 28% rule.
- It determines the maximum total debt you can afford based on the 36% rule and subtracts your existing monthly debts to find the maximum affordable mortgage payment.
- The more conservative of these two calculated affordable mortgage payment amounts is used.
- Using this affordable monthly payment, along with the interest rate and loan term, the calculator estimates the maximum loan principal you can borrow.
- Finally, it adds your down payment to this estimated loan amount to provide an estimate of the maximum home price you may be able to afford. It also estimates the monthly PITI for that price.
Important Considerations
- Estimates Only: This calculator provides an estimate. Actual loan approval depends on many factors, including your credit score, credit history, employment stability, lender-specific guidelines, and the specific property you intend to buy.
- Property Taxes and Insurance: Estimates for property taxes and homeowner's insurance can vary significantly by location. The calculator makes a general assumption, but your actual costs could be higher or lower.
- Other Homeownership Costs: Remember to budget for closing costs, moving expenses, potential repairs, and ongoing maintenance.
- PMI: If your down payment is less than 20%, you will likely have to pay Private Mortgage Insurance (PMI), which will increase your monthly housing expense. This calculator may not explicitly factor in PMI.
Use this calculator as a starting point to understand your potential buying power. It's highly recommended to speak with a mortgage lender or broker for a pre-approval to get a precise understanding of your borrowing capacity.
Example Scenario:
Let's say you have:
- Annual Household Income: $90,000
- Total Monthly Debt Payments: $400 (e.g., car payment)
- Down Payment Amount: $30,000
- Estimated Annual Interest Rate: 6.5%
- Loan Term: 30 years
Based on these figures, the calculator would estimate your maximum affordable home price, loan amount, and monthly PITI, helping you set a realistic budget for your home search.