Your Estimated Mortgage Affordability
Enter your details above to see your estimated affordability.
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function calculateAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var currentDebts = parseFloat(document.getElementById("currentDebts").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");
// Basic validation
if (isNaN(monthlyIncome) || isNaN(currentDebts) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// Rule of thumb: Debt-to-Income Ratio (DTI)
// Lenders often look at two DTI ratios:
// 1. Front-end DTI (housing costs only): typically < 28% of gross monthly income
// 2. Back-end DTI (all debts including housing): typically < 36% of gross monthly income
// For simplicity, we'll use a combined approach, estimating housing costs.
// A common guideline is that total housing costs (PITI – Principal, Interest, Taxes, Insurance)
// should not exceed 28% of gross monthly income. And total debt (including housing)
// should not exceed 36% of gross monthly income.
var maxHousingPaymentRatio = 0.28; // 28% of gross monthly income for housing
var maxTotalDebtRatio = 0.36; // 36% of gross monthly income for all debts
var maxHousingPayment = monthlyIncome * maxHousingPaymentRatio;
var remainingIncomeForOtherDebts = monthlyIncome * maxTotalDebtRatio – currentDebts;
// The maximum housing payment is limited by whichever is lower:
// 1. The direct housing affordability limit (28% of income)
// 2. The amount left after covering existing debts within the total debt limit (36% of income)
var affordableMonthlyPayment = Math.min(maxHousingPayment, remainingIncomeForOtherDebts);
// Ensure affordable monthly payment is not negative
if (affordableMonthlyPayment 0 && interestRate > 0) {
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
// Mortgage payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where: M = monthly payment, P = principal loan amount, i = monthly interest rate, n = number of payments
// We need to solve for P: P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
if (denominator > 0) {
loanAmount = estimatedPAndI * (numerator / denominator);
}
}
// The maximum home price affordable is the loan amount plus the down payment.
var maxHomePrice = loanAmount + downPayment;
// Displaying results
var formattedMonthlyIncome = monthlyIncome.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedCurrentDebts = currentDebts.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedDownPayment = downPayment.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedInterestRate = interestRate.toFixed(2) + "%";
var formattedLoanTerm = loanTerm + " years";
var formattedAffordableMonthlyPayment = affordableMonthlyPayment.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedEstimatedPAndI = estimatedPAndI.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedLoanAmount = loanAmount.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedMaxHomePrice = maxHomePrice.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
resultDiv.innerHTML =
"
Estimated Monthly Income (After Tax): " + formattedMonthlyIncome + "" +
"
Total Monthly Debt Payments: " + formattedCurrentDebts + "" +
"
Down Payment: " + formattedDownPayment + "" +
"
Interest Rate: " + formattedInterestRate + "" +
"
Loan Term: " + formattedLoanTerm + "" +
"
" +
"
Estimated Maximum Monthly Housing Payment (PITI): " + formattedAffordableMonthlyPayment + "" +
"
Estimated Monthly Principal & Interest Payment: " + formattedEstimatedPAndI + "" +
"
Estimated Maximum Mortgage Loan Amount: " + formattedLoanAmount + "" +
"
Estimated Maximum Home Price You Can Afford: " + formattedMaxHomePrice + "" +
"
Note: This is an estimate. Actual loan amounts depend on lender's specific underwriting criteria, credit score, property taxes, insurance costs, and other factors. The PITI (Principal, Interest, Taxes, Insurance) is an approximation.";
}
Understanding Mortgage Affordability
Buying a home is one of the biggest financial decisions you'll ever make, and understanding how much mortgage you can afford is the critical first step. Lenders use various metrics to determine your borrowing capacity, but a good personal estimate can help you set realistic expectations and search for homes within your budget.
Key Factors in Mortgage Affordability
Several factors influence how much a lender is willing to loan you. Our calculator focuses on the most significant ones:
- Monthly Income (After Tax): This is the money you have available after taxes and deductions. Lenders will typically look at your gross income (before taxes) for official applications, but using your net income (after tax) provides a more realistic picture of your personal budget.
- Existing Monthly Debt Payments: This includes minimum payments on credit cards, auto loans, student loans, personal loans, and any other recurring debts. Lenders use these to calculate your Debt-to-Income (DTI) ratio.
- Down Payment: The upfront cash you contribute towards the purchase price of the home. A larger down payment reduces the amount you need to borrow, potentially lowering your monthly payments and enabling you to qualify for a larger loan with less risk for the lender.
- Interest Rate: This is the cost of borrowing money, expressed as a percentage of the loan amount. Even a small difference in interest rate can significantly impact your monthly payment and the total interest paid over the life of the loan. Rates are influenced by market conditions, your credit score, and the loan term.
- Loan Term: The length of time you have to repay the mortgage, typically 15 or 30 years. Shorter loan terms usually have higher monthly payments but result in less interest paid overall. Longer terms have lower monthly payments but more interest paid over time.
How the Calculator Works (Simplified)
Our calculator uses common lending guidelines and mortgage formulas to provide an estimate. It primarily considers the Debt-to-Income (DTI) ratio. Lenders often use two DTI metrics:
- Front-End Ratio (Housing Ratio): This typically measures proposed housing expenses (Principal, Interest, Taxes, Insurance – PITI) as a percentage of your gross monthly income. A common benchmark is 28%.
- Back-End Ratio (Total Debt Ratio): This measures all your monthly debt obligations (including PITI) as a percentage of your gross monthly income. A common benchmark is 36%.
Our calculator takes your after-tax income and existing debts to estimate a maximum affordable monthly housing payment that respects these DTI guidelines. It then works backward using the provided interest rate and loan term to estimate the maximum loan amount you could qualify for and, finally, the maximum home price you can afford by adding your down payment.
Important Note: This calculator provides an estimate for informational purposes only. Actual mortgage approval and loan amounts are subject to lender verification, credit scoring, property appraisal, and other underwriting requirements. It's always recommended to speak with a mortgage professional for personalized advice and pre-approval.