Buying a home is one of the biggest financial decisions you'll ever make. Understanding how much you can realistically afford for a mortgage is a crucial first step. This calculator helps you estimate your potential borrowing power based on your income, existing debts, down payment, and prevailing interest rates.
Key Factors in Mortgage Affordability:
Monthly Income: Lenders look at your reliable income to determine if you can handle monthly payments. The higher your income, the more you can potentially borrow.
Existing Debts: Your existing monthly debt payments (like car loans, student loans, and credit card minimums) reduce the amount of income available for a mortgage payment. Lenders often use a Debt-to-Income (DTI) ratio to assess this. A common guideline is a DTI below 43%, but this can vary.
Down Payment: A larger down payment reduces the amount you need to borrow, which directly impacts your maximum loan amount and can sometimes help you secure better interest rates.
Interest Rate: Even small changes in interest rates significantly affect your monthly payment and the total interest paid over the life of the loan. Higher rates mean lower borrowing power for the same monthly payment.
Loan Term: The number of years you take to repay the loan. Shorter terms mean higher monthly payments but less interest paid overall. Longer terms mean lower monthly payments but more interest paid over time.
How the Calculator Works:
This calculator uses a common approach to estimate affordability. It first determines the maximum percentage of your income that could be allocated to housing costs (including mortgage principal, interest, property taxes, and homeowner's insurance – often referred to as PITI). A typical lender might allow up to 28% of gross monthly income for PITI, but this is a guideline and can be more or less depending on the lender and your overall financial profile.
It then subtracts your existing monthly debt payments from your total income to understand how much is left for a mortgage. The calculator then works backward from the available funds to estimate the maximum loan amount you could qualify for at the given interest rate and loan term.
Please Note: This calculator provides an *estimate* only. It does not account for all potential fees, private mortgage insurance (PMI), property taxes, homeowner's insurance, or HOA fees, which will all impact your actual monthly payment and total homeownership cost. It's essential to consult with a mortgage lender for a pre-approval and a precise understanding of your borrowing capacity.
function calculateMortgageAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var existingDebts = parseFloat(document.getElementById("existingDebts").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultElement = document.getElementById("result");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(monthlyIncome) || isNaN(existingDebts) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) {
resultElement.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (monthlyIncome <= 0 || existingDebts < 0 || downPayment < 0 || interestRate < 0 || loanTerm <= 0) {
resultElement.innerHTML = "Please enter realistic positive values.";
return;
}
// A common guideline for the maximum housing expense (PITI) is 28% of gross monthly income.
// This is a simplified assumption; lenders use more complex DTI ratios.
var maxHousingExpense = monthlyIncome * 0.28;
var availableForMortgage = maxHousingExpense – existingDebts;
if (availableForMortgage 0 && numberOfPayments > 0) {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
var monthlyPaymentFormula = (monthlyInterestRate * factor) / (factor – 1);
maxLoanAmount = availableForMortgage / monthlyPaymentFormula;
} else if (monthlyInterestRate === 0 && numberOfPayments > 0) {
// Handle 0% interest rate case (though uncommon for mortgages)
maxLoanAmount = availableForMortgage * numberOfPayments;
}
// The maximum affordable home price is the max loan amount plus the down payment.
var maxHomePrice = maxLoanAmount + downPayment;
// Format results for display
var formattedMaxHomePrice = maxHomePrice.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
var formattedAvailableForMortgage = availableForMortgage.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
resultElement.innerHTML =
"