Determining how much house you can afford is a crucial step in the home-buying process. It's not just about the loan amount you can qualify for, but also about your overall financial picture and the ongoing costs of homeownership. This Mortgage Affordability Calculator is designed to give you a realistic estimate of the maximum home price you can comfortably afford, taking into account your income, existing debts, down payment, and projected homeownership expenses.
Key Factors Influencing Affordability:
Annual Household Income: This is the primary driver of your borrowing power. Lenders will assess your ability to repay the loan based on your consistent income.
Total Monthly Debt Payments: This includes car loans, student loans, credit card payments, and any other recurring debts. High debt-to-income ratios can significantly impact your loan eligibility and affordability.
Down Payment: A larger down payment reduces the loan amount needed, lowers your monthly payments, and can help you avoid private mortgage insurance (PMI).
Interest Rate: Even small changes in the interest rate can have a substantial impact on your monthly payments and the total interest paid over the life of the loan.
Loan Term: Shorter loan terms mean higher monthly payments but less interest paid overall. Longer terms result in lower monthly payments but more interest paid.
Property Taxes: These are annual costs that vary by location and are typically paid monthly as part of your mortgage payment (escrow).
Homeowner's Insurance: This is a mandatory cost to protect your home against damage or loss, also usually paid monthly via escrow.
Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home's purchase price, you'll likely need to pay PMI, an additional monthly expense.
How the Calculator Works:
This calculator uses a common guideline for mortgage affordability, which suggests that your total housing costs (Principal, Interest, Taxes, Insurance – PITI) should not exceed 28% of your gross monthly income, and your total debt (including PITI) should not exceed 36% of your gross monthly income. It then works backward from these maximum allowable monthly payments to estimate the maximum loan amount and, consequently, the maximum home price you can afford, considering your down payment.
Note: This calculator provides an estimate only. Your actual borrowing capacity may vary based on lender-specific criteria, credit score, market conditions, and other financial factors. It is always recommended to speak with a mortgage lender for a pre-approval and a more precise understanding of your financial situation.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").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 pmi = parseFloat(document.getElementById("pmi").value);
var resultElement = document.getElementById("result");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebt) || monthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(propertyTaxes) || propertyTaxes < 0 ||
isNaN(homeInsurance) || homeInsurance < 0 ||
isNaN(pmi) || pmi < 0) {
resultElement.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var grossMonthlyIncome = annualIncome / 12;
// Guideline 1: Housing costs (PITI) should not exceed 28% of gross monthly income
var maxPitiPayment = grossMonthlyIncome * 0.28;
// Guideline 2: Total debt (PITI + other debts) should not exceed 36% of gross monthly income
var maxTotalDebtPayment = grossMonthlyIncome * 0.36;
// Calculate maximum allowed monthly payment for mortgage (Principal & Interest only)
// This is the lower of what's allowed by the 28% rule or the 36% rule after subtracting other debts.
var maxMortgagePayment = Math.min(maxPitiPayment, maxTotalDebtPayment – monthlyDebt);
if (maxMortgagePayment <= 0) {
resultElement.innerHTML = "Based on your income and debt, you may not qualify for a mortgage at this time. Consult a lender for personalized advice.";
return;
}
// Calculate monthly costs for taxes, insurance, and PMI
var monthlyPropertyTaxes = propertyTaxes / 12;
var monthlyHomeInsurance = homeInsurance / 12;
var monthlyPmi = pmi / 12;
var totalMonthlyNonPIMortgageCosts = monthlyPropertyTaxes + monthlyHomeInsurance + monthlyPmi;
// Subtract these non-principal/interest costs from the max mortgage payment to find the P&I payment capacity
var maxPrincipalInterestPayment = maxMortgagePayment – totalMonthlyNonPIMortgageCosts;
if (maxPrincipalInterestPayment 0) {
maxLoanAmount = maxPrincipalInterestPayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else { // Handle zero interest rate case, though unlikely for mortgages
maxLoanAmount = maxPrincipalInterestPayment * numberOfPayments;
}
// Calculate maximum affordable home price
var maxHomePrice = maxLoanAmount + downPayment;
// Format results for display
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxHomePrice = maxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxPitiPayment = maxPitiPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxMortgagePayment = maxMortgagePayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxPrincipalInterestPayment = maxPrincipalInterestPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultElement.innerHTML = "
Estimated Affordability:
" +
"Based on your inputs, the estimated maximum home price you can afford is: " + formattedMaxHomePrice + "" +
"This includes:" +
"
" +
"
Estimated maximum loan amount: " + formattedMaxLoanAmount + "
" +
"
Your down payment: " + downPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' }) + "
" +
"
" +
"Breakdown of monthly payment estimates:" +
"
" +
"
Maximum estimated total housing payment (PITI): " + formattedMaxPitiPayment + " (approx. 28% of gross monthly income)
" +
"
Maximum estimated total debt payment including PITI: " + formattedMaxTotalDebtPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' }) + " (approx. 36% of gross monthly income)
" +
"
Maximum estimated principal & interest payment: " + formattedMaxPrincipalInterestPayment + "