Determining how much house you can afford is a crucial step in the home-buying process. A mortgage affordability calculator helps you estimate the maximum loan amount you might qualify for, considering your financial situation and current market conditions.
The primary factors influencing your affordability include your annual household income, the size of your down payment, the prevailing interest rates, the term of the loan, and additional homeownership costs like property taxes and homeowners insurance. Lenders typically use debt-to-income ratios (DTI) to assess risk. A common guideline is that your total monthly housing expenses (Principal, Interest, Taxes, Insurance – PITI) should not exceed 28-36% of your gross monthly income, and your total debt obligations (including PITI) should not exceed 43-50% of your gross monthly income.
Key Inputs Explained:
Annual Household Income: The total gross income of all borrowers combined per year.
Down Payment Amount: The cash you pay upfront towards the purchase price. A larger down payment reduces the loan amount needed.
Estimated Annual Interest Rate: The annual percentage rate you expect to pay on the mortgage loan. This significantly impacts your monthly payments.
Loan Term (Years): The duration over which you will repay the mortgage, typically 15, 20, or 30 years. Longer terms mean lower monthly payments but more interest paid overall.
Annual Property Taxes: The yearly cost of property taxes, usually paid to your local government.
Annual Homeowners Insurance: The yearly cost of insuring your home against damage and liability.
This calculator provides an estimate based on common affordability metrics. It's essential to consult with a mortgage lender for a pre-approval and a precise understanding of your borrowing capacity.
function calculateMortgage() {
var income = parseFloat(document.getElementById("income").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 resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(income) || income <= 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(propertyTaxes) || propertyTaxes < 0 ||
isNaN(homeInsurance) || homeInsurance < 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Convert annual figures to monthly
var monthlyIncome = income / 12;
var monthlyPropertyTaxes = propertyTaxes / 12;
var monthlyHomeInsurance = homeInsurance / 12;
// Calculate the maximum PITI based on the 28% rule (common guideline)
var maxPITI = monthlyIncome * 0.28;
// Calculate the maximum loan amount one can afford based on max PITI
// We need to solve for P (Principal) in the P&I formula,
// where PITI = P + I + T + A, and P&I = P * [r(1+r)^n] / [(1+r)^n – 1]
// This requires an iterative approach or financial functions not directly available in basic JS.
// A simplified approach is to estimate the maximum loan amount that fits within the remaining budget after taxes and insurance.
var maxPrincipalAndInterest = maxPITI – monthlyPropertyTaxes – monthlyHomeInsurance;
if (maxPrincipalAndInterest 0) {
maxLoanAmount = maxPrincipalAndInterest * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else { // Handle case where interest rate is 0% (unlikely but for completeness)
maxLoanAmount = maxPrincipalAndInterest * numberOfPayments;
}
// The maximum affordable home price is the loan amount plus the down payment
var maxAffordablePrice = maxLoanAmount + downPayment;
// Format currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
resultDiv.innerHTML =
"Estimated Maximum Monthly P&I Payment: " + formatter.format(maxPrincipalAndInterest) + "" +
"Estimated Maximum Loan Amount: " + formatter.format(maxLoanAmount) + "" +
"Estimated Maximum Affordable Home Price: " + formatter.format(maxAffordablePrice) + "";
}