Understanding how much you can afford to borrow for a mortgage is a crucial first step in the home-buying process.
This Mortgage Affordability Calculator helps you estimate your potential borrowing power based on your income,
debts, and desired monthly payment. It considers key factors that lenders use to assess your financial situation.
Key Factors Considered:
Gross Monthly Income: This is your total income before taxes and other deductions. Lenders typically want your total housing payment (including principal, interest, taxes, and insurance) to be no more than 28% of your gross monthly income.
Existing Monthly Debt Payments: This includes payments for credit cards, student loans, car loans, personal loans, and any other recurring debts. Lenders usually prefer your total debt payments (including your potential mortgage) to be no more than 36% of your gross monthly income.
Estimated Annual Property Taxes: This is the yearly amount you expect to pay in property taxes. It's a significant part of your total monthly housing cost.
Estimated Annual Homeowner's Insurance: This is the yearly cost of insuring your home against damage and liability.
Estimated Annual HOA Dues (if applicable): If you're buying a property in a community with a Homeowners Association, these monthly fees are factored in.
Interest Rate: The annual interest rate on the mortgage loan. Higher interest rates mean higher monthly payments.
Loan Term: The length of the mortgage loan, typically 15 or 30 years. Shorter terms result in higher monthly payments but less total interest paid over time.
By inputting these details, the calculator provides an estimated maximum mortgage amount you might be approved for, helping you set a realistic budget for your new home. Remember, this is an estimate, and your actual loan approval will depend on the specific lender's underwriting criteria.
15 Years
30 Years
function calculateMortgageAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var existingMonthlyDebt = parseFloat(document.getElementById("existingMonthlyDebt").value);
var annualPropertyTaxes = parseFloat(document.getElementById("annualPropertyTaxes").value);
var annualHomeInsurance = parseFloat(document.getElementById("annualHomeInsurance").value);
var annualHOADues = parseFloat(document.getElementById("annualHOADues").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var resultElement = document.getElementById("mortgageResult");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(grossMonthlyIncome) || grossMonthlyIncome <= 0 ||
isNaN(existingMonthlyDebt) || existingMonthlyDebt < 0 ||
isNaN(annualPropertyTaxes) || annualPropertyTaxes < 0 ||
isNaN(annualHomeInsurance) || annualHomeInsurance < 0 ||
isNaN(annualHOADues) || annualHOADues < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0) {
resultElement.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// Lender's typical DTI limits
var maxHousingRatio = 0.28; // 28% of gross monthly income for housing
var maxTotalDebtRatio = 0.36; // 36% of gross monthly income for all debts
var maxTotalMonthlyPayment = grossMonthlyIncome * maxTotalDebtRatio;
var maxHousingPayment = grossMonthlyIncome * maxHousingRatio;
var allowedMonthlyDebtPayment = maxTotalMonthlyPayment – existingMonthlyDebt;
// The actual maximum housing payment we can afford is limited by both the housing ratio and the total debt ratio.
var affordableMonthlyHousingPayment = Math.min(maxHousingPayment, allowedMonthlyDebtPayment);
// Calculate monthly taxes, insurance, and HOA dues
var monthlyPropertyTaxes = annualPropertyTaxes / 12;
var monthlyHomeInsurance = annualHomeInsurance / 12;
var monthlyHOADues = annualHOADues / 12;
var monthlyPITI_HOA = monthlyPropertyTaxes + monthlyHomeInsurance + monthlyHOADues;
// The maximum monthly principal and interest (P&I) payment we can afford
var maxMonthlyPI = affordableMonthlyHousingPayment – monthlyPITI_HOA;
if (maxMonthlyPI 0) {
maxLoanAmount = maxMonthlyPI * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else {
// If interest rate is 0, loan amount is simply maxMonthlyPI * numberOfPayments
maxLoanAmount = maxMonthlyPI * numberOfPayments;
}
// Display the results
resultElement.innerHTML = "Estimated Maximum Mortgage Amount You Can Afford: $" + maxLoanAmount.toFixed(2) + "" +
"Estimated Maximum Monthly Housing Payment (PITI + HOA): $" + affordableMonthlyHousingPayment.toFixed(2) + "" +
"This estimate assumes typical lender debt-to-income ratios (28% for housing, 36% for total debt).";
}