Buying a home is a significant financial decision, and understanding how much you can realistically afford is crucial. This mortgage affordability calculator is designed to help you estimate the maximum mortgage loan you can qualify for based on your income, debts, and desired down payment. It takes into account common lending criteria to give you a clearer picture of your borrowing power.
When a lender assesses your mortgage application, they typically look at several factors to determine your affordability. Two of the most important are your Debt-to-Income Ratio (DTI) and your Loan-to-Value Ratio (LTV).
Debt-to-Income Ratio (DTI) is the percentage of your gross monthly income that goes towards paying your monthly debt payments, including your estimated mortgage payment (principal, interest, taxes, and insurance), car loans, student loans, and credit card minimum payments. Lenders generally prefer a DTI of 43% or lower, though this can vary. Your estimated mortgage payment includes not just the principal and interest on the loan, but also property taxes and homeowner's insurance (often referred to as PITI).
Loan-to-Value Ratio (LTV) compares the amount of your mortgage loan to the appraised value of the home. A lower LTV generally means less risk for the lender and may help you avoid private mortgage insurance (PMI) if you put down 20% or more.
Use this calculator to get an initial estimate. Remember, this is a tool for guidance; your actual loan approval amount will depend on the specific lender, your credit score, market conditions, and a full underwriting process.
Calculate Your Estimated Mortgage Affordability
function calculateMortgageAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var propertyTaxesAnnual = parseFloat(document.getElementById("propertyTaxesAnnual").value);
var homeInsuranceAnnual = parseFloat(document.getElementById("homeInsuranceAnnual").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(grossMonthlyIncome) || isNaN(monthlyDebtPayments) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTermYears) || isNaN(propertyTaxesAnnual) || isNaN(homeInsuranceAnnual)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (grossMonthlyIncome <= 0 || monthlyDebtPayments < 0 || downPayment < 0 || interestRate <= 0 || loanTermYears <= 0 || propertyTaxesAnnual < 0 || homeInsuranceAnnual < 0) {
resultDiv.innerHTML = "Please enter positive values for income, loan term, and interest rate. Debt payments, down payment, taxes, and insurance can be zero but not negative.";
return;
}
var maxDTI = 0.43; // Standard DTI limit for many lenders
var maxMonthlyHousingPayment = (grossMonthlyIncome * maxDTI) – monthlyDebtPayments;
if (maxMonthlyHousingPayment <= 0) {
resultDiv.innerHTML = "Based on your income and existing debts, you may not qualify for additional mortgage payments with a 43% DTI. Please consult with a mortgage professional.";
return;
}
var monthlyTaxes = propertyTaxesAnnual / 12;
var monthlyInsurance = homeInsuranceAnnual / 12;
var monthlyPrincipalAndInterest = maxMonthlyHousingPayment – monthlyTaxes – monthlyInsurance;
if (monthlyPrincipalAndInterest <= 0) {
resultDiv.innerHTML = "Your estimated monthly taxes and insurance are too high for your affordable housing payment. You may need a larger down payment or a more affordable property.";
return;
}
var annualInterestRate = interestRate / 100;
var monthlyInterestRate = annualInterestRate / 12;
var loanTermMonths = loanTermYears * 12;
// Calculate maximum loan amount using the mortgage payment formula (solving for P)
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var maxLoanAmount = monthlyPrincipalAndInterest * (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths));
// The calculated maxLoanAmount is based on the desired housing payment.
// We need to consider the down payment to get the maximum home price.
var maxHomePrice = maxLoanAmount + downPayment;
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxHomePrice = maxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyPrincipalAndInterest = monthlyPrincipalAndInterest.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyTaxes = monthlyTaxes.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyInsurance = monthlyInsurance.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = "
Estimated Affordability Results:
";
resultDiv.innerHTML += "Maximum Estimated Mortgage Loan Amount: " + formattedMaxLoanAmount + "";
resultDiv.innerHTML += "Estimated Maximum Home Purchase Price (with your down payment): " + formattedMaxHomePrice + "";
resultDiv.innerHTML += "This estimation assumes a maximum Debt-to-Income (DTI) ratio of 43%.";
resultDiv.innerHTML += "Your estimated monthly housing payment (PITI) would be approximately:";
resultDiv.innerHTML += "Principal & Interest: " + formattedMonthlyPrincipalAndInterest + "";
resultDiv.innerHTML += "Property Taxes: " + formattedMonthlyTaxes + "";
resultDiv.innerHTML += "Homeowner's Insurance: " + formattedMonthlyInsurance + "";
resultDiv.innerHTML += "Note: This calculator provides an estimate. Actual mortgage approval depends on lender-specific criteria, credit score, market conditions, and a full underwriting process.";
}