Determining how much house you can afford is a crucial step in the home-buying process. While lenders will give you a pre-approval amount, it's wise to understand the factors that influence your borrowing capacity. The mortgage affordability calculator helps you estimate the maximum loan amount you might qualify for, considering your income, existing debts, down payment, interest rates, and loan terms.
Key Factors in Mortgage Affordability:
Annual Household Income: This is the primary driver of your borrowing power. Lenders assess your ability to repay the loan based on your consistent income.
Total Monthly Debt Payments: This includes all your recurring monthly debt obligations, such as credit card minimum payments, auto loans, student loans, and personal loans. Lenders use these figures to calculate your debt-to-income ratio (DTI).
Down Payment: The amount you put down upfront directly reduces the loan amount you need. A larger down payment can significantly increase your affordability and potentially lead to better loan terms.
Interest Rate: Even small changes in interest rates can have a substantial impact on your monthly payments and the total interest paid over the life of the loan.
Loan Term: A longer loan term (e.g., 30 years) will result in lower monthly payments compared to a shorter term (e.g., 15 years), but you'll pay more interest overall.
How the Calculator Works:
The calculator uses common lending guidelines to estimate your maximum affordable mortgage payment. It typically considers a maximum front-end debt-to-income ratio (often around 28%) for housing costs (principal, interest, taxes, and insurance – PITI) and a back-end debt-to-income ratio (often around 36%) which includes PITI plus all other monthly debts.
This calculator provides an ESTIMATE. It's essential to speak with a mortgage lender for a precise pre-approval and to understand all associated costs, including property taxes, homeowner's insurance, and potential private mortgage insurance (PMI).
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) / 100; // Convert percentage to decimal
var loanTermYears = parseInt(document.getElementById("loanTermYears").value);
var resultElement = document.getElementById("result");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebtPayments) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTermYears) ||
annualIncome <= 0 || monthlyDebtPayments < 0 || downPayment < 0 || interestRate <= 0 || loanTermYears <= 0) {
resultElement.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Common lender guideline: front-end DTI (PITI / Gross Monthly Income) ~28%
// Common lender guideline: back-end DTI (PITI + Other Debts / Gross Monthly Income) ~36%
// We'll use a conservative approach, often limited by the back-end DTI.
var grossMonthlyIncome = annualIncome / 12;
var maxTotalMonthlyDebtPaymentAllowed = grossMonthlyIncome * 0.36; // 36% DTI ratio
var maxAllowedPiti = maxTotalMonthlyDebtPaymentAllowed – monthlyDebtPayments;
if (maxAllowedPiti <= 0) {
resultElement.innerHTML = "Based on your income and existing debts, your affordability for a new mortgage payment is very limited. Consider reducing debt or increasing income.";
return;
}
// Now, we need to find the maximum loan amount (Principal) that results in a PITI payment 0) {
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
principal = P_and_I_payment_needed_for_max_loan * (numerator / denominator);
} else { // Handle 0 interest rate case, though unlikely for mortgages
principal = P_and_I_payment_needed_for_max_loan * numberOfPayments;
}
var maxLoanAmount = principal;
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
// Consider a front-end DTI of 28% as another check
var maxPITI_based_on_28_dti = grossMonthlyIncome * 0.28;
var estimatedMaxLoanAmount_from_28dti = 0;
if (monthlyInterestRate > 0) {
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
estimatedMaxLoanAmount_from_28dti = maxPITI_based_on_28_dti * (numerator / denominator);
} else {
estimatedMaxLoanAmount_from_28dti = maxPITI_based_on_28_dti * numberOfPayments;
}
// The actual affordable loan amount is often the lower of the two estimations derived from DTI ratios.
var finalMaxLoanAmount = Math.min(maxLoanAmount, estimatedMaxLoanAmount_from_28dti);
var finalEstimatedMaxHomePrice = finalMaxLoanAmount + downPayment;
// Format results for clarity
var formattedMaxLoanAmount = finalMaxLoanAmount.toLocaleString(undefined, { minimumFractionDigits: 0, maximumFractionDigits: 0 });
var formattedEstimatedMaxHomePrice = finalEstimatedMaxHomePrice.toLocaleString(undefined, { minimumFractionDigits: 0, maximumFractionDigits: 0 });
var formattedMaxAllowedPiti = maxAllowedPiti.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
var formattedGrossMonthlyIncome = grossMonthlyIncome.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
var formattedMonthlyDebtPayments = monthlyDebtPayments.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
resultElement.innerHTML =
"Estimated Maximum Mortgage Loan Amount: $" + formattedMaxLoanAmount + "" +
"Estimated Maximum Home Price: $" + formattedEstimatedMaxHomePrice + "" +
"Note: This estimate is based on a Debt-to-Income (DTI) ratio of approximately 36% for total debt and considers the principal and interest (P&I) portion of your payment. It does NOT include property taxes, homeowner's insurance, or potential PMI. These additional costs (PITI) could further reduce your affordable loan amount. Lender approval may vary." +
"Details: Gross Monthly Income: $" + formattedGrossMonthlyIncome + ", Max Total Monthly Debt Allowed (36% DTI): $" + (grossMonthlyIncome * 0.36).toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ", Existing Monthly Debt: $" + formattedMonthlyDebtPayments + ", Max Allowed for P&I: $" + formattedMaxAllowedPiti + "";
}