Mortgage Affordability Calculator
.calculator-wrapper {
font-family: sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ddd;
border-radius: 8px;
background-color: #f9f9f9;
}
.calculator-wrapper h2 {
text-align: center;
margin-bottom: 20px;
color: #333;
}
.calculator-form .form-group {
margin-bottom: 15px;
display: flex;
align-items: center;
}
.calculator-form label {
flex: 1;
margin-right: 10px;
font-weight: bold;
color: #555;
}
.calculator-form input[type="number"] {
flex: 1;
padding: 8px;
border: 1px solid #ccc;
border-radius: 4px;
box-sizing: border-box;
}
.calculator-wrapper button {
display: block;
width: 100%;
padding: 10px;
background-color: #4CAF50;
color: white;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 16px;
margin-top: 20px;
}
.calculator-wrapper button:hover {
background-color: #45a049;
}
.calculator-result {
margin-top: 20px;
padding: 15px;
background-color: #e0f7fa;
border: 1px solid #00bcd4;
border-radius: 4px;
text-align: center;
font-size: 1.1em;
color: #0077cc;
}
.calculator-result strong {
color: #0056b3;
}
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultElement = document.getElementById("result");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) ||
annualIncome < 0 || monthlyDebt < 0 || downPayment < 0 || interestRate < 0 || loanTerm <= 0) {
resultElement.innerHTML = "
Error: Please enter valid positive numbers for all fields.";
return;
}
// Lender's common rule of thumb: Debt-to-Income (DTI) ratio limit
// Front-end DTI (housing expenses / gross income) and Back-end DTI (all debt / gross income)
// We'll focus on a simplified approach using a maximum housing payment.
// A common guideline is that housing costs (PITI – Principal, Interest, Taxes, Insurance)
// should not exceed 28% of gross monthly income, and total debt (including housing)
// should not exceed 36% of gross monthly income.
// For simplicity, we'll estimate maximum affordable mortgage payment based on the 28% rule.
var grossMonthlyIncome = annualIncome / 12;
var maxHousingPayment = grossMonthlyIncome * 0.28; // 28% of gross monthly income for PITI
// We need to estimate Principal & Interest (P&I) payment.
// This calculator will estimate the maximum loan amount based on P&I.
// To do this, we'll assume taxes, insurance, and HOA fees are a percentage of the loan amount or a fixed value.
// For this simplified calculator, we'll assume taxes/insurance/HOA will be a portion of the maxHousingPayment.
// Let's allocate 20% of the maxHousingPayment to Taxes, Insurance, HOA for a rough estimate.
var estimatedTaxesInsuranceHOA = maxHousingPayment * 0.20; // Rough estimate
var maxPIPayment = maxHousingPayment – estimatedTaxesInsuranceHOA;
if (maxPIPayment <= 0) {
resultElement.innerHTML = "
Result: Based on your income and debt, your affordable housing payment is too low to estimate a mortgage. Please consult a financial advisor.";
return;
}
// Calculate the maximum loan amount based on the maximum P&I payment
var monthlyInterestRate = interestRate / 100 / 12;
var numberOfPayments = loanTerm * 12;
// Mortgage Payment Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where M is the monthly payment, P is the principal loan amount, i is the monthly interest rate, and n is the number of payments.
// Rearranging to solve for P: P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var maxLoanAmount = 0;
if (monthlyInterestRate > 0) {
maxLoanAmount = maxPIPayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else {
// Handle 0% interest rate case
maxLoanAmount = maxPIPayment * numberOfPayments;
}
var totalAffordableHomePrice = maxLoanAmount + downPayment;
resultElement.innerHTML = "Based on your inputs, your estimated maximum affordable home price is:
$" + totalAffordableHomePrice.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",") + "." +
"Estimated maximum loan amount:
$" + maxLoanAmount.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",") + "." +
"Estimated maximum monthly Principal & Interest (P&I) payment:
$" + maxPIPayment.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",") + ".";
}
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. Lenders use various metrics to assess your borrowing capacity, and understanding these can help you set realistic expectations and budget effectively.
Key Factors in Mortgage Affordability:
- Annual Income: Your stable, verifiable income is the primary factor lenders consider. It demonstrates your ability to repay the loan over the long term.
- Existing Monthly Debt Payments: This includes all your recurring monthly obligations such as credit card payments, car loans, student loans, and personal loans. Lenders use these to calculate your Debt-to-Income (DTI) ratio.
- Down Payment: The amount of cash you can put down upfront. A larger down payment reduces the loan amount needed, potentially making a higher-priced home affordable and often leading to better loan terms.
- Interest Rate: The annual interest rate on the mortgage significantly impacts your monthly payment and the total cost of the loan over its lifetime.
- Loan Term: The duration of the mortgage (e.g., 15 years, 30 years). Shorter terms generally mean higher monthly payments but less interest paid overall, while longer terms have lower monthly payments but more interest paid over time.
How the Calculator Works (Simplified Explanation):
This calculator uses a common guideline that lenders often employ: the 28/36 rule. This rule suggests that your housing expenses (including principal, interest, property taxes, and homeowners insurance – known as PITI) should ideally not exceed 28% of your gross monthly income. Additionally, your total monthly debt payments (including your potential mortgage payment) should not exceed 36% of your gross monthly income.
Our calculator focuses on the first part of this rule. It calculates your gross monthly income and then determines the maximum monthly housing payment you might afford (based on the 28% guideline). From this maximum housing payment, it makes a rough estimation for property taxes, homeowners insurance, and any potential HOA fees, leaving a target amount for your Principal & Interest (P&I) mortgage payment. Using this P&I target, the current interest rate, and the loan term, it then calculates the maximum loan amount you could qualify for. Finally, it adds your specified down payment to estimate the total home price you can afford.
Important Considerations:
- This is an estimation tool. Actual loan approval depends on a lender's specific underwriting criteria, your credit score, employment history, and other financial factors.
- The calculator provides a simplified estimate for taxes, insurance, and HOA fees. These costs can vary significantly by location and property type.
- Always consult with a mortgage professional or financial advisor for personalized advice.
Example Scenario:
Let's say you have:
- Annual Income: $90,000
- Total Monthly Debt Payments (excluding potential mortgage): $500
- Down Payment: $40,000
- Estimated Annual Interest Rate: 6.5%
- Loan Term: 30 years
Based on these inputs, the calculator would estimate your maximum affordable home price. For instance, with a $90,000 annual income ($7,500 monthly), a 28% housing payment allowance would be $2,100. Subtracting a rough estimate for taxes/insurance/HOA, leaves a target P&I payment. This target P&I, combined with a 6.5% interest rate over 30 years, would determine the maximum loan amount. Add your $40,000 down payment to this loan amount to get your estimated affordable home price.