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 based on your financial situation. This calculation typically considers your income, existing debts, down payment, and the prevailing interest rates and loan terms.
Key Factors in Mortgage Affordability:
Gross Monthly Income: This is your total income before taxes and other deductions. Lenders use this as a primary indicator of your ability to repay a loan.
Monthly Debt Payments: This includes all your recurring monthly obligations, such as credit card payments, student loans, car loans, and any other installment debts. Lenders want to ensure your new mortgage payment, combined with existing debts, doesn't exceed a certain debt-to-income ratio.
Down Payment: The upfront amount you pay towards the home. A larger down payment reduces the loan amount needed, which can increase your affordability and potentially secure a better interest rate.
Interest Rate: The percentage charged by the lender for borrowing money. A lower interest rate means lower monthly payments and greater affordability.
Loan Term: The length of time you have to repay the mortgage (e.g., 15 years, 30 years). Shorter terms have higher monthly payments but result in less interest paid over time.
The 28/36 Rule: A Common Guideline
Many lenders use the "28/36 rule" as a general guideline. This suggests that your total housing costs (including mortgage principal and interest, property taxes, homeowner's insurance, and potentially HOA fees) should not exceed 28% of your gross monthly income. Additionally, your total debt (including housing costs and all other monthly debts) should not exceed 36% of your gross monthly income. While our calculator provides a more direct estimate, understanding this rule can give you a good benchmark.
How the Calculator Works:
Our calculator estimates your maximum affordable mortgage payment by considering a common lender guideline that allows for a certain percentage of your income to go towards housing (often around 28-30% of gross monthly income), after accounting for your existing debt obligations. It then uses this estimated maximum monthly payment, along with the provided interest rate and loan term, to calculate the principal loan amount you could potentially borrow. The down payment is then added to this loan amount to suggest a maximum home price you might afford.
Disclaimer: This calculator provides an estimate for informational purposes only and does not constitute a loan offer or guarantee of approval. Your actual borrowing capacity may vary based on lender-specific criteria, credit score, property appraisal, and other factors. It is always recommended to consult with a mortgage professional for personalized advice.
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 resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
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;
// Estimate maximum housing payment (using a common guideline, e.g., 28% of gross income)
// This is a simplified model. Lenders have more complex DTI calculations.
var maxHousingPaymentEstimate = grossMonthlyIncome * 0.28;
// Calculate maximum allowed total debt
var maxTotalDebt = grossMonthlyIncome * 0.36;
// Maximum monthly mortgage payment is the lesser of:
// 1. The estimated max housing payment
// 2. The max total debt minus existing monthly debts
var maxMonthlyMortgagePayment = Math.min(maxHousingPaymentEstimate, maxTotalDebt – monthlyDebt);
// Ensure maxMonthlyMortgagePayment is not negative
if (maxMonthlyMortgagePayment 0) {
// Mortgage Payment Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Solving for P (Principal Loan Amount): P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
maxLoanAmount = maxMonthlyMortgagePayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else {
// If interest rate is 0, loan amount is simply monthly payment * number of payments
maxLoanAmount = maxMonthlyMortgagePayment * numberOfPayments;
}
var maxAffordableHomePrice = maxLoanAmount + downPayment;
// Format results
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxAffordableHomePrice = maxAffordableHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxMonthlyMortgagePayment = maxMonthlyMortgagePayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedGrossMonthlyIncome = grossMonthlyIncome.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxTotalDebt = maxTotalDebt.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML =
"