#mortgage-calculator-app {
font-family: sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 8px;
background-color: #f9f9f9;
}
.calculator-form h2 {
text-align: center;
margin-bottom: 20px;
color: #333;
}
.form-group {
margin-bottom: 15px;
display: flex;
flex-direction: column;
}
.form-group label {
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.form-group input[type="number"] {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 16px;
}
button {
width: 100%;
padding: 12px 20px;
background-color: #4CAF50;
color: white;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 16px;
margin-top: 10px;
transition: background-color 0.3s ease;
}
button:hover {
background-color: #45a049;
}
.calculator-result {
margin-top: 25px;
padding: 15px;
background-color: #e0f2f7;
border: 1px solid #b3e5fc;
border-radius: 4px;
text-align: center;
font-size: 18px;
color: #00796b;
font-weight: bold;
}
.calculator-result p {
margin: 5px 0;
}
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var debtToIncomeRatio = parseFloat(document.getElementById("debtToIncomeRatio").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(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (annualIncome <= 0 || debtToIncomeRatio <= 0 || interestRate < 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter positive values for income, DTI, and loan term, and a non-negative interest rate.";
return;
}
// Calculate maximum monthly debt payment allowed based on DTI
var maxMonthlyDebtPayment = (annualIncome / 12) * (debtToIncomeRatio / 100);
// Calculate the maximum loan amount you can afford with the given interest rate and loan term
// This uses the loan payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where:
// M = Monthly Payment (maxMonthlyDebtPayment)
// P = Principal Loan Amount (what we want to find)
// i = Monthly interest rate (annualInterestRate / 12)
// n = Total number of payments (loanTermInYears * 12)
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
// Rearranging the formula to solve for P:
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var maxLoanAmount = maxMonthlyDebtPayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
// Format results for display
var formattedMaxMonthlyDebt = maxMonthlyDebtPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = "Maximum Monthly Debt Payment Allowed: " + formattedMaxMonthlyDebt + "" +
"Estimated Maximum Loan Amount You Can Afford: " + formattedMaxLoanAmount + "";
}
Understanding Mortgage Affordability
Buying a home is a significant financial decision, and understanding how much you can realistically afford is crucial. Mortgage affordability calculators help potential homeowners estimate the maximum loan amount they qualify for, taking into account their income, existing debts, and prevailing interest rates.
Key Factors in Mortgage Affordability:
- Annual Income: This is the primary factor lenders consider. Your income dictates your ability to repay a loan. Higher income generally translates to a higher borrowing capacity.
- Debt-to-Income Ratio (DTI): This ratio compares your total monthly debt payments (including the potential mortgage payment, car loans, student loans, credit card minimums, etc.) to your gross monthly income. Lenders typically prefer a DTI of 36% or lower for a mortgage, though this can vary. A lower DTI indicates you have more disposable income.
- Interest Rate: The interest rate significantly impacts your monthly payment and the total interest paid over the life of the loan. Even a small difference in the interest rate can lead to substantial savings or increased costs. Mortgage rates fluctuate based on market conditions and your creditworthiness.
- Loan Term: This is the length of time you have to repay the mortgage, usually 15 or 30 years. A shorter loan term results in higher monthly payments but less interest paid overall. A longer term means lower monthly payments but more interest paid over time.
How the Calculator Works:
This Mortgage Affordability Calculator uses your provided Annual Income and a chosen Target Debt-to-Income Ratio to determine the maximum monthly debt payment you can comfortably manage. It then utilizes the standard mortgage payment formula, factoring in the Estimated Mortgage Interest Rate and the Loan Term, to calculate the maximum loan principal you could afford with that monthly payment.
It's important to remember that this calculator provides an estimate. Actual mortgage approval depends on many other factors, including your credit score, down payment amount, lender-specific underwriting guidelines, and closing costs, which are not included in this calculation. Always consult with a mortgage professional for personalized advice.