Your Estimated Maximum Mortgage Affordability
function calculateMortgageAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var debtPayments = parseFloat(document.getElementById("debtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(monthlyIncome) || monthlyIncome <= 0) {
resultDiv.innerHTML = "Please enter a valid monthly income.";
return;
}
if (isNaN(debtPayments) || debtPayments < 0) {
resultDiv.innerHTML = "Please enter valid monthly debt payments.";
return;
}
if (isNaN(downPayment) || downPayment < 0) {
resultDiv.innerHTML = "Please enter a valid down payment amount.";
return;
}
if (isNaN(interestRate) || interestRate <= 0) {
resultDiv.innerHTML = "Please enter a valid annual interest rate.";
return;
}
if (isNaN(loanTerm) || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter a valid loan term in years.";
return;
}
// General rule of thumb: Front-end Debt-to-Income (DTI) ratio of 28%
// This is a simplified approach. Actual lending criteria vary significantly.
var maxMonthlyHousingPayment = monthlyIncome * 0.28; // 28% of gross monthly income for PITI (Principal, Interest, Taxes, Insurance)
// Estimated monthly housing costs include principal, interest, taxes, and insurance.
// For simplicity, we'll estimate taxes and insurance at 1% of the loan value annually,
// and then divide by 12 for monthly. This is a very rough estimate.
var estimatedAnnualTaxesAndInsuranceRate = 0.01; // 1% of loan value
var estimatedMonthlyTaxesAndInsurance = (downPayment * estimatedAnnualTaxesAndInsuranceRate) / 12; // Very rough estimate based on down payment
var maxMonthlyPrincipalAndInterest = maxMonthlyHousingPayment – estimatedMonthlyTaxesAndInsurance;
if (maxMonthlyPrincipalAndInterest <= 0) {
resultDiv.innerHTML = "Based on your income and existing debts, your estimated maximum monthly housing payment is too low to afford a mortgage with current estimates. Consider increasing your income, reducing debt, or increasing your down payment.";
return;
}
// Calculate maximum loan amount based on the maximum monthly principal and interest payment
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfMonths = loanTerm * 12;
// Mortgage Payment Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Rearranging to solve for P (Principal Loan Amount):
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var maxLoanAmount = maxMonthlyPrincipalAndInterest * (Math.pow(1 + monthlyInterestRate, numberOfMonths) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfMonths));
// The maximum affordable home price is the maximum loan amount plus the down payment.
var maxAffordableHomePrice = maxLoanAmount + downPayment;
// Display the result
resultDiv.innerHTML = "Based on a
28% debt-to-income ratio for housing costs and your inputs, your estimated maximum affordable home price could be:" +
"$" + maxAffordableHomePrice.toFixed(2) + "" +
"
This estimate includes your down payment of $" + downPayment.toFixed(2) + "." +
"
Your estimated maximum monthly Principal & Interest payment is: $" + maxMonthlyPrincipalAndInterest.toFixed(2) + "";
}
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font-family: Arial, sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ddd;
border-radius: 8px;
box-shadow: 0 2px 4px rgba(0,0,0,0.1);
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.calculator-container h2 {
text-align: center;
margin-bottom: 20px;
color: #333;
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margin-bottom: 15px;
display: flex;
align-items: center;
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margin-right: 10px;
font-weight: bold;
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.form-group input[type="number"] {
flex: 1.5;
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border: 1px solid #ccc;
border-radius: 4px;
box-sizing: border-box; /* Ensures padding doesn't affect width */
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margin-left: 10px;
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width: 100%;
padding: 10px 15px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 1em;
transition: background-color 0.2s ease;
}
.calculator-container button:hover {
background-color: #0056b3;
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margin-top: 25px;
padding-top: 20px;
border-top: 1px dashed #eee;
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.calculator-result h3 {
text-align: center;
margin-bottom: 15px;
color: #444;
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#result {
text-align: center;
padding: 15px;
background-color: #e9ecef;
border-radius: 4px;
min-height: 60px; /* Ensure it has some height even when empty */
}
#result p {
margin-bottom: 10px;
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#result small {
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}
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. While lenders will provide a pre-approval amount, it's wise to have your own estimate of affordability. This calculator uses a common guideline to help you understand your potential borrowing capacity.
The 28% Rule (Housing Expense Ratio)
A widely used rule of thumb in mortgage lending is the 28% rule. This guideline suggests that your total monthly housing expenses—including principal, interest, property taxes, and homeowner's insurance (often referred to as PITI)—should not exceed 28% of your gross monthly income. Gross income is your income before taxes and other deductions.
How This Calculator Works
This calculator takes your estimated gross monthly income and applies the 28% rule to determine the maximum monthly payment you can allocate towards your housing costs. It then deducts an estimate for monthly property taxes and homeowner's insurance (based on a general assumption of 1% of the loan value annually). The remaining amount is what's available for your monthly principal and interest payment.
Using this maximum monthly principal and interest payment, along with your specified interest rate and loan term, the calculator estimates the maximum loan amount you could qualify for. Finally, it adds your provided down payment to this loan amount to estimate the maximum affordable home price.
Important Considerations:
- This is an Estimate: This calculator provides a general estimate. Actual loan approval depends on many factors, including your credit score, debt-to-income ratio (including all debts, not just housing), employment history, lender-specific policies, and current market conditions.
- Debt-to-Income Ratio (DTI): Lenders also look at your overall DTI, which includes all monthly debt obligations (car loans, student loans, credit cards, etc.) in addition to housing costs. A common guideline is that total DTI should not exceed 36-43%, but this varies by lender and loan type.
- Closing Costs and Reserves: Remember to factor in closing costs (fees associated with obtaining a mortgage) and funds for ongoing home maintenance and repairs.
- Taxes and Insurance Estimates: The estimates for property taxes and homeowner's insurance can vary significantly by location and the specific property.
- Down Payment: A larger down payment reduces the loan amount needed, potentially lowering your monthly payments and the total interest paid over the life of the loan.
For a precise understanding of your borrowing power, it's always best to speak with a mortgage lender or broker.