Determining how much house you can afford is a crucial step in the home-buying process. This Mortgage Affordability Calculator is designed to give you an estimated maximum loan amount and the corresponding potential monthly mortgage payment you might qualify for, based on your financial inputs. It helps you set realistic expectations and budget effectively.
Key Factors in Affordability:
Annual Household Income: This is the primary driver of your borrowing capacity. Lenders look at your total verifiable income.
Monthly Debt Payments: Existing debts such as car loans, student loans, and credit card payments significantly impact your debt-to-income ratio (DTI), a key metric for lenders. Lowering these debts can increase your borrowing power.
Down Payment: A larger down payment reduces the loan amount needed, which can make a mortgage more affordable and may help you avoid private mortgage insurance (PMI).
Interest Rate: Even small changes in the interest rate can substantially affect your monthly payment and the total interest paid over the life of the loan.
Loan Term: Shorter loan terms (e.g., 15 years) result in higher monthly payments but less total interest paid. Longer terms (e.g., 30 years) have lower monthly payments but more total interest.
How the Calculator Works:
This calculator estimates affordability by considering your income, existing debts, and the potential mortgage terms. It typically uses a guideline that your total housing costs (including principal, interest, taxes, and insurance – PITI) should not exceed a certain percentage of your gross monthly income (often around 28-31%), and your total debt obligations (including PITI) should not exceed another percentage (often around 36-43%). The calculator focuses on the principal and interest portion of the mortgage payment, which is then used to estimate the maximum loan amount you can support.
Note: This calculator provides an estimate. Actual mortgage approval depends on many factors, including your credit score, lender-specific criteria, and current market conditions. It's always best to consult 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");
resultDiv.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) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Calculate estimated maximum monthly housing payment (P&I) based on DTI guidelines
// Using a common guideline: total housing costs (PITI) ~30% of gross monthly income
// And total debt (including PITI) ~36% of gross monthly income
// For simplicity, we'll assume PITI is roughly 1.25 * (Principal + Interest)
// This is a simplification; actual PITI varies greatly with property taxes and insurance.
var grossMonthlyIncome = annualIncome / 12;
var maxTotalDebtPayment = grossMonthlyIncome * 0.36;
var maxHousingPaymentTarget = maxTotalDebtPayment – monthlyDebt; // This is the max PITI
// Estimating P&I component from PITI. This is a rough estimate.
// Let's assume taxes and insurance are about 1% of the loan value annually,
// or about 0.083% of the loan value monthly.
// So, PITI = P&I + Taxes + Insurance
// P&I = PITI – Taxes – Insurance
// This calculation is complex without knowing the loan value.
// A common approach is to estimate the maximum loan based on a maximum monthly P&I payment.
// Let's use a more direct approach: estimate maximum P&I payment directly.
// A common guideline for P&I alone is around 25-28% of gross monthly income.
var maxMonthlyPI = grossMonthlyIncome * 0.28; // Using 28% as an example
if (maxMonthlyPI 0 && numberOfPayments > 0) {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
maximumLoanAmount = maxMonthlyPI * (factor – 1) / (monthlyInterestRate * factor);
} else if (monthlyInterestRate === 0 && numberOfPayments > 0) {
// Handle zero interest rate scenario (less common for mortgages but possible)
maximumLoanAmount = maxMonthlyPI * numberOfPayments;
}
var estimatedMaximumHomePrice = maximumLoanAmount + downPayment;
resultDiv.innerHTML =
"Estimated Maximum Loan Amount: $" + maximumLoanAmount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "" +
"Estimated Maximum Home Price (Loan + Down Payment): $" + estimatedMaximumHomePrice.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "" +
"Estimated Maximum Monthly Principal & Interest Payment: $" + maxMonthlyPI.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "" +
"Note: This is an estimate. Actual affordability depends on credit score, lender requirements, taxes, insurance, and other factors.";
}
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