Use this calculator to estimate how much home you can afford based on your income, debts, and down payment. Remember, this is an estimate and actual mortgage approval may vary.
.calculator-container {
font-family: sans-serif;
max-width: 600px;
margin: 20px auto;
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.calculator-result {
margin-top: 25px;
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function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").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 resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Basic validation
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebtPayments) || monthlyDebtPayments < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var monthlyIncome = annualIncome / 12;
// Lenders often use a Debt-to-Income (DTI) ratio. A common guideline is a front-end DTI of 28% (housing costs) and a back-end DTI of 36% (total debt).
// We'll use the back-end DTI for a more conservative estimate of total housing affordability.
var maxTotalMonthlyDebt = monthlyIncome * 0.36;
var maxHousingPayment = maxTotalMonthlyDebt – monthlyDebtPayments;
if (maxHousingPayment 0) {
maxLoanAmount = maxHousingPayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else {
// Handle case of 0% interest rate (rare for mortgages, but for calculation purposes)
maxLoanAmount = maxHousingPayment * numberOfPayments;
}
var affordableHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML = "Estimated maximum monthly housing payment (Principal, Interest, Taxes, Insurance – PITI): $" + maxHousingPayment.toFixed(2) + "" +
"Estimated maximum loan amount: $" + maxLoanAmount.toFixed(2) + "" +
"Estimated affordable home price: $" + affordableHomePrice.toFixed(2) + "";
}
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. It's not just about what a lender might approve you for, but what you can comfortably manage each month without straining your finances. This calculator provides an estimate based on common lending guidelines, but your personal financial situation and comfort level are paramount.
Key Factors for Mortgage Affordability:
Annual Gross Income: This is your total income before taxes and other deductions. Lenders look at this as the primary indicator of your ability to repay a loan. A higher income generally means you can afford a larger mortgage.
Monthly Debt Payments: This includes existing recurring debts such as car loans, student loans, credit card minimum payments, and any other installment loans. Lenders use these to calculate your Debt-to-Income (DTI) ratio.
Down Payment: The amount of cash you put towards the purchase price upfront. A larger down payment reduces the loan amount needed, which can lower your monthly payments and potentially help you avoid Private Mortgage Insurance (PMI).
Interest Rate: The percentage charged by the lender on the loan amount. Even small differences in interest rates can significantly impact your monthly payment and the total interest paid over the life of the loan. This calculator uses an estimated annual rate.
Loan Term: The length of time over which you'll repay the mortgage, typically 15 or 30 years. Shorter loan terms result in higher monthly payments but less interest paid overall, while longer terms have lower monthly payments but more interest.
How the Calculator Works:
This calculator uses a common lending guideline: the 36% back-end Debt-to-Income (DTI) ratio. This means your total monthly debt payments (including the estimated mortgage principal, interest, property taxes, homeowner's insurance, and any HOA fees) should not exceed 36% of your gross monthly income.
It first calculates your gross monthly income.
It determines the maximum amount you can allocate towards all monthly debt payments (36% of monthly income).
It subtracts your existing monthly debt payments from this maximum to find out how much is left for your housing payment (PITI).
Using the estimated interest rate and loan term, it calculates the maximum loan amount you can afford based on that available housing payment.
Finally, it adds your down payment to the maximum loan amount to estimate the total affordable home price.
Important Note: This calculator provides an estimate. Actual mortgage approval depends on many factors, including your credit score, employment history, lender-specific DTI requirements, and the costs associated with homeownership beyond the mortgage, such as property taxes, homeowner's insurance, and potential HOA fees. It's always recommended to speak with a mortgage professional for personalized advice.