Mortgage Calculator with Today’s Rates

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Mortgage Affordability Calculator

Understanding Mortgage Affordability

Determining how much house you can afford is a crucial step in the home-buying process. While lenders will provide a pre-approval amount, it's wise to understand the factors that influence your borrowing capacity. This mortgage affordability calculator helps you estimate your potential mortgage spending power, considering your income, existing debts, down payment, and current market conditions.

Key Factors in Mortgage Affordability:

  • Annual Income: Lenders primarily look at your income to assess your ability to repay a loan. A higher income generally translates to a higher borrowing capacity.
  • Monthly Debt Payments: Existing financial obligations like car loans, student loans, and credit card payments significantly impact how much lenders believe you can handle for a new mortgage payment. These are often factored into a Debt-to-Income (DTI) ratio.
  • Down Payment: The larger your down payment, the less you need to borrow, which reduces your loan amount and can lead to better interest rates and lower monthly payments. It also signifies a lower risk for the lender.
  • Interest Rate: Even small changes in the interest rate can have a substantial impact on your monthly payment and the total interest paid over the life of the loan.
  • Loan Term: The length of the mortgage (e.g., 15 years, 30 years) affects your monthly payment. Shorter terms usually mean higher monthly payments but less interest paid overall.

How the Calculator Works:

This calculator uses common lending guidelines to estimate affordability. It typically considers a maximum front-end ratio (housing costs) and a back-end ratio (total debt obligations) to determine a suitable loan amount. For simplicity, this calculator focuses on estimating the maximum loan amount you might qualify for based on your inputs, then derives the corresponding home price considering your down payment. It assumes standard lending practices where lenders aim for a total debt-to-income ratio (including the potential mortgage) that is manageable.

Disclaimer: This calculator provides an estimate for informational purposes only and is not a pre-approval or a guarantee of loan approval. Actual mortgage amounts and terms may vary based on lender policies, credit score, and other underwriting criteria.

function calculateAffordability() { 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 loanTerm = parseFloat(document.getElementById("loanTerm").value); var resultDiv = document.getElementById("result"); if (isNaN(annualIncome) || isNaN(monthlyDebtPayments) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) { resultDiv.innerHTML = "Please enter valid numbers for all fields."; return; } // Using a common guideline for maximum monthly housing payment (PITI – Principal, Interest, Taxes, Insurance) // Often lenders use a DTI ratio limit, typically around 43-50% of gross monthly income. // Let's estimate a maximum total debt payment (including PITI) as 45% of gross monthly income. var grossMonthlyIncome = annualIncome / 12; var maxTotalMonthlyPayment = grossMonthlyIncome * 0.45; var maxMonthlyMortgagePayment = maxTotalMonthlyPayment – monthlyDebtPayments; // Ensure maxMonthlyMortgagePayment is not negative if (maxMonthlyMortgagePayment 0 && numberOfPayments > 0) { var numerator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments); var denominator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1; maxLoanAmount = maxMonthlyMortgagePayment * (denominator / numerator); } else if (monthlyInterestRate === 0 && numberOfPayments > 0) { // Handle 0% interest rate maxLoanAmount = maxMonthlyMortgagePayment * numberOfPayments; } var estimatedMaxHomePrice = maxLoanAmount + downPayment; // Display results resultDiv.innerHTML = "

Estimated Affordability

" + "Estimated Maximum Loan Amount: $" + maxLoanAmount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "" + "Estimated Maximum Home Price (including down payment): $" + estimatedMaxHomePrice.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "" + "Estimated Maximum Monthly Mortgage Payment (Principal & Interest): $" + maxMonthlyMortgagePayment.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + ""; }

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