Buying a home is a significant financial decision, and understanding how much you can realistically afford is the crucial first step. The Mortgage Affordability Calculator is designed to give you an estimated maximum loan amount you might qualify for, based on your income, existing debts, down payment, and prevailing interest rates.
Key Factors Explained:
Annual Income: This is your total gross income before taxes. Lenders use this as a primary indicator of your ability to repay a loan.
Existing Monthly Debt Payments: This includes all your recurring monthly obligations such as credit card payments, student loans, car loans, and personal loans. Lower existing debt generally means more capacity for a mortgage payment.
Down Payment: The upfront cash you pay towards the purchase of the home. A larger down payment reduces the loan amount needed and can lead to better loan terms.
Estimated Interest Rate: This is the annual interest rate you anticipate for your mortgage. Even small changes in interest rates can significantly impact your monthly payments and the total interest paid over the life of the loan.
Loan Term (Years): The duration over which you will repay the mortgage. Common terms are 15 or 30 years. Shorter terms result in higher monthly payments but less total interest paid, while longer terms have lower monthly payments but more total interest.
How the Calculator Works:
This calculator typically uses common lending guidelines. A widely used rule of thumb is that your total monthly housing costs (including principal, interest, property taxes, and homeowner's insurance – often referred to as PITI) should not exceed 28% of your gross monthly income. Additionally, your total debt payments (including the estimated mortgage payment) should not exceed 36% of your gross monthly income. This calculator simplifies this by focusing on your income's capacity for a loan based on the provided inputs.
Disclaimer: This calculator provides an estimate only and should not be considered a loan approval or a guarantee of financing. Your actual borrowing capacity will depend on a detailed review of your credit history, employment stability, lender-specific criteria, and current market conditions. It is highly recommended to consult with a mortgage professional for personalized advice.
function calculateMortgageAffordability() {
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 resultElement = document.getElementById("result");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) || annualIncome <= 0 || loanTerm <= 0 || interestRate < 0 || downPayment < 0) {
resultElement.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var monthlyIncome = annualIncome / 12;
// Using the 28/36 rule as a common guideline.
// Max PITI (Principal, Interest, Taxes, Insurance) = 28% of Gross Monthly Income
// Max Total Debt = 36% of Gross Monthly Income
var maxHousingPayment = monthlyIncome * 0.28;
var maxTotalDebtPayment = monthlyIncome * 0.36;
var maxMortgagePayment = maxTotalDebtPayment – monthlyDebt;
// Ensure maxMortgagePayment is not negative
if (maxMortgagePayment 0 && numberOfPayments > 0) {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
var numerator = monthlyInterestRate * factor;
var denominator = factor – 1;
// Rearranging the formula to solve for P (Principal Loan Amount)
// P = M * [ (1 + i)^n – 1] / [ i(1 + i)^n ]
if (denominator > 0) {
maxLoanAmount = affordableMonthlyPayment * denominator / numerator;
}
} else if (monthlyInterestRate === 0 && numberOfPayments > 0) {
// If interest rate is 0, the loan amount is simply the total affordable payments
maxLoanAmount = affordableMonthlyPayment * numberOfPayments;
}
// The estimated maximum home price is the max loan amount plus the down payment.
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
// Display the results
resultElement.innerHTML = `
Estimated Affordability:
Maximum Affordable Monthly Housing Payment (Estimate): $${affordableMonthlyPayment.toFixed(2)}
Estimated Maximum Loan Amount: $${maxLoanAmount.toFixed(2)}
Estimated Maximum Home Price: $${estimatedMaxHomePrice.toFixed(2)}