Mortgage Affordability Calculator
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. A mortgage affordability calculator helps you estimate the maximum loan amount you might qualify for and, consequently, the price range of homes you should consider. This calculator takes into account your income, existing debts, down payment, and the terms of the mortgage itself to provide an estimate.
Key Factors in Mortgage Affordability:
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Annual Household Income: This is the primary driver of how much a lender believes you can repay. Higher income generally means a higher potential loan amount.
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Total Monthly Debt Payments: Lenders look at your Debt-to-Income (DTI) ratio. This includes all your recurring monthly debt obligations like car loans, student loans, and credit card minimum payments, *excluding* the potential mortgage payment. A lower DTI indicates more financial flexibility.
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Down Payment: The larger your down payment, the less you need to borrow. This reduces your loan amount and can also help you secure better interest rates and avoid Private Mortgage Insurance (PMI) on conventional loans.
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Interest Rate: The annual interest rate significantly impacts your monthly payment and the total interest paid over the life of the loan. Even small differences in interest rates can lead to substantial variations in affordability.
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Loan Term: This is the duration over which you will repay the loan, typically 15 or 30 years. A shorter loan term means higher monthly payments but less total interest paid. A longer term means lower monthly payments but more total interest paid.
How the Calculator Works (Simplified):
This calculator uses common lending guidelines to estimate your affordability. Generally, lenders consider a borrower's total monthly housing expenses (including principal, interest, taxes, and insurance – PITI) to be around 28% of their gross monthly income, and total debt obligations (including housing) to be no more than 36% of gross monthly income. Our calculator simplifies this by focusing on the loan amount you can service based on your income and existing debts, assuming a target monthly payment. It then calculates the maximum loan amount based on that monthly payment, the interest rate, and the loan term.
Disclaimer: This calculator provides an ESTIMATE only. Actual loan approval depends on a lender's specific underwriting criteria, credit score, employment history, and other factors. It is highly recommended to speak with a mortgage professional for personalized advice.
function calculateAffordability() {
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 resultDiv = document.getElementById("result");
if (isNaN(annualIncome) || annualIncome < 0 ||
isNaN(monthlyDebt) || monthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var grossMonthlyIncome = annualIncome / 12;
// Using a common guideline: Max PITI (Principal, Interest, Taxes, Insurance) is ~28% of gross monthly income
// And Max Total Debt (PITI + other debts) is ~36% of gross monthly income
// We'll aim for a comfortable monthly payment, often derived from the 28% rule, and ensure total debt doesn't exceed 36%
var maxPitiPayment = grossMonthlyIncome * 0.28;
var maxTotalDebtPayment = grossMonthlyIncome * 0.36;
var availableForMortgagePayment = maxTotalDebtPayment – monthlyDebt;
// We will use the lower of the two available amounts for mortgage payment to be conservative
var targetMonthlyPayment = Math.min(maxPitiPayment, availableForMortgagePayment);
if (targetMonthlyPayment 0) {
// Standard mortgage payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Rearranged to solve for P (Principal/Loan Amount): P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
maxLoanAmount = targetMonthlyPayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else {
// If interest rate is 0, loan amount is simply payment * number of payments
maxLoanAmount = targetMonthlyPayment * numberOfPayments;
}
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
// Display results
var formattedMaxLoan = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxHomePrice = estimatedMaxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyPayment = targetMonthlyPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML =
"
Estimated Affordability:
" +
"Estimated Maximum Loan Amount:
" + formattedMaxLoan + "" +
"Estimated Maximum Home Price (incl. Down Payment):
" + formattedMaxHomePrice + "" +
"Estimated Monthly Mortgage Payment (P&I only, excluding taxes/insurance):
" + formattedMonthlyPayment + "";
}
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padding: 20px;
border: 1px solid #ccc;
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