Determining how much house you can afford is a crucial step in the home-buying process.
This mortgage affordability calculator helps you estimate your borrowing capacity based on
your financial situation. It considers your income, existing debts, down payment, and the
current interest rate environment.
Key Factors Explained:
Annual Income: This is your gross annual income before taxes. Lenders use this as a primary indicator of your ability to repay a loan.
Debt-to-Income Ratio (DTI): This is a key metric lenders use. It's the percentage of your gross monthly income that goes towards paying your monthly debt payments. A lower DTI generally indicates a lower risk for lenders. For affordability calculations, we often look at a maximum DTI that lenders might approve for housing costs.
Down Payment: The upfront cash you pay towards the home purchase. A larger down payment reduces the loan amount needed and can also help you secure a better interest rate.
Interest Rate: The annual rate charged by the lender for borrowing money. Even a small difference in interest rate can significantly impact your monthly payments and the total cost of the loan over time.
Loan Term: The duration over which you will repay the mortgage. Common terms are 15 or 30 years. Shorter terms mean higher monthly payments but less interest paid overall, while longer terms have lower monthly payments but more interest paid.
How the Calculator Works:
The calculator first estimates your maximum allowable monthly debt payment based on your annual income and desired debt-to-income ratio. It then subtracts potential recurring monthly expenses (like car payments, student loans, and credit card minimums – though these are simplified in this basic calculator) to determine the maximum monthly mortgage payment you can afford.
Using this maximum affordable monthly payment, along with the estimated interest rate and loan term, the calculator then works backward to estimate the maximum mortgage loan amount you could qualify for. Finally, adding your down payment to this estimated loan amount gives you an idea of the maximum home price you might be able to afford.
Disclaimer: This calculator provides an estimate only. Actual loan approval amounts may vary based on the lender's specific underwriting criteria, credit score, loan type, property taxes, homeowner's insurance, and other factors. It's always recommended to consult with a mortgage professional for personalized advice.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var debtToIncomeRatio = parseFloat(document.getElementById("debtToIncomeRatio").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
if (isNaN(annualIncome) || isNaN(debtToIncomeRatio) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (annualIncome <= 0 || debtToIncomeRatio <= 0 || interestRate < 0 || loanTerm 0) {
maxLoanAmount = maxMonthlyDebtPayment * (Math.pow(1 + monthlyInterestRate, numberOfMonths) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfMonths));
} else { // Handle case for 0% interest rate
maxLoanAmount = maxMonthlyDebtPayment * numberOfMonths;
}
var maxHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML =
"