Use this calculator to estimate how much house you can afford based on your income, debts, and down payment. Understanding your borrowing power upfront can help you narrow your home search effectively.
Your Estimated Mortgage Affordability:
Disclaimer: This is an estimate. Actual loan approval and terms depend on lender policies, credit score, property taxes, homeowner's insurance, and other factors.
Understanding Mortgage Affordability
The amount you can afford to borrow for a mortgage is a crucial factor when starting your home-buying journey. Lenders typically use a few key ratios to determine your borrowing capacity, primarily focusing on your Debt-to-Income (DTI) ratio. A common guideline is that your total housing expenses (including principal, interest, property taxes, and homeowner's insurance – often called PITI) should not exceed 28% of your gross monthly income, and your total monthly debt payments (including housing) should not exceed 36% of your gross monthly income. This calculator provides an estimate based on these principles, but also considers your down payment and loan terms.
Key Factors:
Annual Income: Your total earnings before taxes. Lenders look at gross income.
Monthly Debt Payments: This includes all recurring debts like car loans, student loans, and credit card minimum payments. It does NOT usually include your current rent or existing mortgage payments if you're looking to upgrade.
Down Payment: The upfront cash you pay towards the purchase price. A larger down payment reduces the loan amount needed.
Interest Rate: The annual interest rate on the mortgage. Higher rates mean higher monthly payments for the same loan amount.
Loan Term: The number of years you have to repay the mortgage (commonly 15 or 30 years). Shorter terms result in higher monthly payments but less interest paid over time.
How it works: This calculator estimates your maximum allowable monthly mortgage payment based on a conservative DTI ratio (often around 36% of gross monthly income minus existing debts). It then uses a standard mortgage payment formula to determine the maximum loan amount you can qualify for with your specified interest rate and loan term. Finally, it adds your down payment to this loan amount to estimate the maximum home price you can afford.
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 resultsDiv = document.getElementById("results");
var maxHomePriceDiv = document.getElementById("maxHomePrice");
var maxMonthlyPaymentDiv = document.getElementById("maxMonthlyPayment");
// Clear previous results
maxHomePriceDiv.innerHTML = "";
maxMonthlyPaymentDiv.innerHTML = "";
// Validate inputs
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebtPayments) || monthlyDebtPayments < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
maxHomePriceDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var grossMonthlyIncome = annualIncome / 12;
// Using a common DTI threshold, e.g., 36% for total debt
// Max total monthly debt allowed = grossMonthlyIncome * 0.36
// Max housing payment = (grossMonthlyIncome * 0.36) – monthlyDebtPayments
// Ensure max housing payment is not negative
var maxTotalMonthlyDebtAllowed = grossMonthlyIncome * 0.36;
var maxMonthlyHousingPayment = maxTotalMonthlyDebtAllowed – monthlyDebtPayments;
if (maxMonthlyHousingPayment 0 && numberOfPayments > 0) {
var loanFactor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
var monthlyPaymentFactor = (monthlyInterestRate * loanFactor) / (loanFactor – 1);
if (monthlyPaymentFactor > 0) {
maxLoanAmount = maxMonthlyHousingPayment / monthlyPaymentFactor;
}
}
var maxHomePrice = maxLoanAmount + downPayment;
// Display results
maxMonthlyPaymentDiv.innerHTML = "Estimated Maximum Monthly Housing Payment (P&I): $" + maxMonthlyHousingPayment.toFixed(2) + "";
maxHomePriceDiv.innerHTML = "Estimated Maximum Home Price You Can Afford: $" + maxHomePrice.toFixed(2) + "";
}
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