Buying a home is one of the biggest financial decisions you'll make. This Mortgage Affordability Calculator helps you estimate how much house you can realistically afford based on your income, existing debts, down payment, interest rates, and loan terms.
Key Factors Explained:
Annual Household Income: This is your total gross income from all sources before taxes. Lenders use this as a primary indicator of your ability to repay a loan.
Down Payment: The amount of money you pay upfront towards the purchase price of the home. A larger down payment reduces the loan amount needed and can lead to better interest rates and lower monthly payments.
Estimated Interest Rate: This is the annual interest rate you expect to pay on your mortgage. Even small differences 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, 20, and 30 years. Shorter terms mean higher monthly payments but less interest paid overall.
Total Monthly Debt Payments: This includes all your recurring monthly debt obligations such as car loans, student loans, and credit card payments. Lenders consider these when assessing your debt-to-income ratio.
How the Calculator Works:
The calculator uses a common guideline where lenders often approve loans for individuals whose total housing costs (principal, interest, taxes, insurance – PITI) do not exceed 28% of their gross monthly income, and whose total debt payments (including PITI) do not exceed 36% of their gross monthly income. This calculator estimates the maximum loan amount you could qualify for and then, factoring in your down payment, the maximum home price you might afford. Please note that this is an estimate, and actual loan approval depends on the lender's specific criteria and underwriting process.
Disclaimer: This calculator provides an estimate for informational purposes only and does not constitute financial advice. Consult with a mortgage professional for personalized guidance.
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function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value) / 100; // Convert percentage to decimal
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").value);
var resultElement = document.getElementById("result");
resultElement.innerHTML = ""; // Clear previous results
// Basic validation
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate < 0 ||
isNaN(loanTermYears) || loanTermYears <= 0 ||
isNaN(monthlyDebtPayments) || monthlyDebtPayments < 0) {
resultElement.innerHTML = "Please enter valid positive numbers for all fields.";
resultElement.style.color = "#d32f2f"; // Red for error
return;
}
var monthlyIncome = annualIncome / 12;
// Lender Guidelines (common DTI ratios)
var maxHousingRatio = 0.28; // 28% for housing (PITI)
var maxTotalDebtRatio = 0.36; // 36% for total debt (PITI + other debts)
// Calculate maximum allowable monthly PITI payment
var maxPITI = monthlyIncome * maxHousingRatio;
// Calculate maximum allowable total monthly debt payment
var maxTotalMonthlyDebt = monthlyIncome * maxTotalDebtRatio;
// Calculate maximum allowable monthly payment for PITI, considering existing debts
var maxAffordablePITI = maxTotalMonthlyDebt – monthlyDebtPayments;
// Ensure we don't exceed the housing ratio limit if that's the tighter constraint
var actualMaxPITI = Math.min(maxPITI, maxAffordablePITI);
if (actualMaxPITI 0) {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
maxLoanAmount = actualMaxPITI * (factor – 1) / (monthlyInterestRate * factor);
} else { // Handle 0% interest rate case
maxLoanAmount = actualMaxPITI * numberOfPayments;
}
var maxAffordableHomePrice = maxLoanAmount + downPayment;
// Format the results for display
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
var formattedMaxAffordableHomePrice = maxAffordableHomePrice.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
var formattedActualMaxPITI = actualMaxPITI.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
resultElement.innerHTML =
"
Your Estimated Affordability:
" +
"Maximum Estimated Monthly PITI Payment: " + formattedActualMaxPITI + "" +
"Estimated Maximum Loan Amount: " + formattedMaxLoanAmount + "" +
"Estimated Maximum Affordable Home Price: " + formattedMaxAffordableHomePrice + "";
resultElement.style.color = "#2e7d32"; // Green for success
}