Determining how much house you can realistically afford is a crucial step in the home-buying process. It's not just about what a lender might approve you for, but what fits comfortably within your budget, allowing you to maintain your lifestyle and financial goals. This mortgage affordability calculator helps you estimate the maximum home price you can afford by considering various financial factors.
Key Factors in Mortgage Affordability:
Annual Household Income: This is the primary source of funds for your mortgage payments. Higher income generally means greater borrowing capacity.
Existing Monthly Debt Payments: Lenders look at your debt-to-income ratio (DTI). Your existing debts (car loans, student loans, credit card minimums) reduce the amount of income available for a mortgage. We typically advise keeping your total DTI below 43%.
Down Payment: A larger down payment reduces the amount you need to borrow, which directly impacts your monthly payments and potentially the interest rate you secure. It also helps avoid or reduce Private Mortgage Insurance (PMI).
Interest Rate: Even a small change in interest rate can significantly affect your monthly payment and the total interest paid over the life of the loan.
Loan Term: The length of your mortgage (e.g., 15 or 30 years) influences your monthly payment. Shorter terms have higher monthly payments but less total interest paid.
Property Taxes: These are an annual cost that is typically rolled into your monthly mortgage payment (escrow).
Homeowner's Insurance: Also an annual cost usually paid through escrow, protecting your home against damage.
Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home's purchase price, lenders usually require PMI to protect themselves. This is an additional monthly cost.
How the Calculator Works:
This calculator uses a common guideline for mortgage affordability: a maximum monthly payment that typically does not exceed 28% of your gross monthly income, minus your other existing monthly debt obligations. It then works backward from this estimated maximum monthly payment (which includes principal, interest, taxes, insurance, and PMI) to estimate the maximum loan amount you can afford. Finally, it adds your down payment to determine the estimated maximum home price.
Disclaimer: This calculator provides an estimate for informational purposes only and should not be considered definitive financial advice. Your actual borrowing capacity will depend on lender-specific underwriting criteria, your credit score, market conditions, and other factors. It is highly recommended to consult with a mortgage professional or financial advisor for personalized guidance.
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 propertyTaxes = parseFloat(document.getElementById("propertyTaxes").value);
var homeInsurance = parseFloat(document.getElementById("homeInsurance").value);
var pmi = parseFloat(document.getElementById("pmi").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) || isNaN(propertyTaxes) || isNaN(homeInsurance) || isNaN(pmi)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// — Calculations —
// Guideline: Max PITI (Principal, Interest, Taxes, Insurance) + PMI <= 28% of gross monthly income
// Max Total Housing Payment <= (Gross Monthly Income * 0.28) – Existing Monthly Debt
var grossMonthlyIncome = annualIncome / 12;
var maxTotalHousingPayment = (grossMonthlyIncome * 0.28) – monthlyDebt;
if (maxTotalHousingPayment <= 0) {
resultDiv.innerHTML = "Based on your income and existing debts, your estimated maximum affordable home price is likely $0 or negative. Please consult a financial advisor.";
return;
}
// Estimate monthly PITI + PMI
var monthlyPropertyTaxes = propertyTaxes / 12;
var monthlyHomeInsurance = homeInsurance / 12;
var monthlyPmi = pmi / 12;
// Monthly P&I payment (Principal & Interest) is the difference
var maxMonthlyPAndI = maxTotalHousingPayment – monthlyPropertyTaxes – monthlyHomeInsurance – monthlyPmi;
if (maxMonthlyPAndI 0 && numberOfPayments > 0) {
maxLoanAmount = maxMonthlyPAndI * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / Math.pow(1 + monthlyInterestRate, numberOfPayments) / monthlyInterestRate;
} else if (maxMonthlyPAndI > 0 && monthlyInterestRate === 0) { // Handle 0% interest rate if applicable (rare but possible)
maxLoanAmount = maxMonthlyPAndI * numberOfPayments;
}
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
// Format results for display
var formattedMaxHomePrice = estimatedMaxHomePrice.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedMaxMonthlyPayment = maxTotalHousingPayment.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedMaxMonthlyPAndI = maxMonthlyPAndI.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
resultDiv.innerHTML =
"Estimated Maximum Affordable Home Price: " + formattedMaxHomePrice + "" +
"This is calculated by adding your down payment to the estimated maximum loan amount." +
"Estimated Maximum Loan Amount: " + formattedMaxLoanAmount + "" +
"Estimated Maximum Total Monthly Housing Payment (PITI + PMI): " + formattedMaxMonthlyPayment + "" +
"This includes principal, interest, property taxes, homeowner's insurance, and PMI." +
"Estimated Maximum Monthly Principal & Interest Payment: " + formattedMaxMonthlyPAndI + "" +
"This is the portion of your payment that goes towards paying down your loan balance and interest.";
}
.calculator-container {
font-family: sans-serif;
max-width: 700px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 8px;
background-color: #f9f9f9;
}
.calculator-title {
text-align: center;
color: #333;
margin-bottom: 20px;
}
.calculator-inputs {
display: grid;
grid-template-columns: repeat(auto-fit, minmax(250px, 1fr));
gap: 15px;
margin-bottom: 20px;
}
.input-group {
display: flex;
flex-direction: column;
}
.input-group label {
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.input-group input[type="number"] {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 1rem;
}
.calculator-button {
display: block;
width: 100%;
padding: 12px 20px;
background-color: #007bff;
color: white;
border: none;
border-radius: 5px;
font-size: 1.1rem;
cursor: pointer;
transition: background-color 0.3s ease;
}
.calculator-button:hover {
background-color: #0056b3;
}
.calculator-result {
margin-top: 25px;
padding: 15px;
border-top: 1px solid #eee;
background-color: #fff;
border-radius: 5px;
box-shadow: 0 2px 4px rgba(0,0,0,0.1);
}
.calculator-result p {
margin-bottom: 10px;
line-height: 1.6;
}
.calculator-result strong {
color: #007bff;
}
.calculator-article {
font-family: sans-serif;
max-width: 700px;
margin: 30px auto;
padding: 20px;
border: 1px solid #eee;
border-radius: 8px;
background-color: #fff;
line-height: 1.7;
color: #333;
}
.calculator-article h2, .calculator-article h3 {
color: #0056b3;
margin-bottom: 15px;
}
.calculator-article h3 {
margin-top: 20px;
}
.calculator-article ul {
margin-left: 20px;
margin-bottom: 15px;
}
.calculator-article li {
margin-bottom: 8px;
}