Understanding how much mortgage you can afford is a crucial first step in the home-buying process. This calculator helps you estimate your potential borrowing power based on your income, debts, and estimated mortgage costs. It takes into account factors like your gross monthly income, existing monthly debt payments, and your desired down payment.
How Much Mortgage Can You Afford?
Lenders typically look at two main ratios when determining mortgage affordability: the Debt-to-Income (DTI) ratio.
Front-End Ratio (Housing Ratio): This ratio compares your total proposed monthly housing expenses (principal, interest, taxes, and insurance – often called PITI) to your gross monthly income. A common guideline is that PITI should not exceed 28% of your gross monthly income.
Back-End Ratio (Total Debt Ratio): This ratio compares your total monthly debt obligations (including your proposed PITI and all other recurring debts like car loans, student loans, and credit card payments) to your gross monthly income. Lenders often prefer this ratio to be no more than 36%, though some programs allow for higher ratios.
This calculator will help you estimate how much you might be able to borrow by considering these ratios and your input details. Remember, this is an estimate, and your actual borrowing capacity will be determined by a lender after a full review of your financial situation.
Mortgage Affordability Estimator
function calculateMortgageAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var currentMonthlyDebt = parseFloat(document.getElementById("currentMonthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var estimatedPropertyTaxes = parseFloat(document.getElementById("estimatedPropertyTaxes").value);
var estimatedHomeInsurance = parseFloat(document.getElementById("estimatedHomeInsurance").value);
var estimatedPMI = parseFloat(document.getElementById("estimatedPMI").value);
var resultDiv = document.getElementById("mortgageResult");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(grossMonthlyIncome) || grossMonthlyIncome <= 0 ||
isNaN(currentMonthlyDebt) || currentMonthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0 ||
isNaN(estimatedPropertyTaxes) || estimatedPropertyTaxes < 0 ||
isNaN(estimatedHomeInsurance) || estimatedHomeInsurance < 0 ||
isNaN(estimatedPMI) || estimatedPMI 0) {
maxLoanAmount = affordableMonthlyPayment * (1 – Math.pow(1 + monthlyInterestRate, -numberOfMonths)) / monthlyInterestRate;
} else {
maxLoanAmount = affordableMonthlyPayment * numberOfMonths; // Handle 0% interest rate
}
// Calculate total monthly housing costs (PITI)
var monthlyPropertyTaxes = estimatedPropertyTaxes / 12;
var monthlyHomeInsurance = estimatedHomeInsurance / 12;
var monthlyPMI = estimatedPMI / 12;
var monthlyPITI = monthlyPropertyTaxes + monthlyHomeInsurance + monthlyPMI;
var maxAffordableHomePrice = maxLoanAmount + downPayment;
var outputHTML = "
Estimated Affordability:
";
outputHTML += "Based on your input, here's an estimated breakdown:";
outputHTML += "
";
outputHTML += "
Maximum PITI (Principal, Interest, Taxes, Insurance) you can afford: $" + affordableMonthlyPayment.toFixed(2) + "