Use this calculator to estimate how much you might be able to borrow for a mortgage based on your income, debts, and desired loan term.
Understanding Mortgage Affordability
Determining how much you can afford for a mortgage is a crucial step in the home-buying process. Lenders typically look at a few key factors to assess your borrowing capacity. This calculator provides an estimated maximum loan amount you might qualify for, but it's important to remember that this is a simplified model.
Key Factors Considered:
Annual Gross 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 car payments, student loan payments, minimum credit card payments, and any personal loan payments. High existing debt can significantly reduce the amount you can borrow for a mortgage.
Down Payment: The upfront amount you pay towards the purchase of the home. A larger down payment reduces the loan amount needed and can improve your chances of approval and potentially secure better interest rates.
Estimated Interest Rate: The annual interest rate on the mortgage loan. Higher interest rates mean higher monthly payments for the same loan amount.
Loan Term: The length of time over which you will repay the mortgage, typically 15 or 30 years. Longer loan terms result in lower monthly payments but more interest paid over the life of the loan.
How the Calculation Works (Simplified):
This calculator uses a common guideline for mortgage lending, often referred to as the "debt-to-income ratio" or DTI. A general rule of thumb is that your total housing expenses (including principal, interest, property taxes, homeowner's insurance, and potentially HOA fees) should not exceed 28% of your gross monthly income, and your total debt (housing + other debts) should not exceed 36% of your gross monthly income. This calculator works backward from these principles to estimate the maximum loan amount. It also factors in your down payment and the potential monthly payment based on the interest rate and loan term.
Disclaimer: This calculator provides an estimate only and is not a loan offer or guarantee of approval. Actual loan amounts and terms will depend on a lender's specific underwriting criteria, credit score, property appraisal, and other factors.
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function calculateMortgageAffordability() {
var grossIncome = parseFloat(document.getElementById("grossIncome").value);
var existingDebts = parseFloat(document.getElementById("existingDebts").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value) / 100; // Convert to decimal
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.style.color = "#28a745"; // Default to green for success
resultDiv.innerHTML = "";
// — Input Validation —
if (isNaN(grossIncome) || grossIncome <= 0) {
resultDiv.innerHTML = "Please enter a valid Annual Gross Income.";
resultDiv.style.color = "red";
return;
}
if (isNaN(existingDebts) || existingDebts < 0) {
resultDiv.innerHTML = "Please enter a valid Monthly Debt Payments amount.";
resultDiv.style.color = "red";
return;
}
if (isNaN(downPayment) || downPayment < 0) {
resultDiv.innerHTML = "Please enter a valid Down Payment amount.";
resultDiv.style.color = "red";
return;
}
if (isNaN(interestRate) || interestRate = 1) {
resultDiv.innerHTML = "Please enter a valid Estimated Interest Rate (between 1% and 100%).";
resultDiv.style.color = "red";
return;
}
if (isNaN(loanTerm) || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter a valid Loan Term in years.";
resultDiv.style.color = "red";
return;
}
// — Calculations —
// Simplified DTI approach: Assume maximum PITI (Principal, Interest, Taxes, Insurance) is 28% of gross monthly income
// And maximum total debt (PITI + existing debts) is 36% of gross monthly income.
// We'll use the more restrictive 36% of gross income for total debt for a more conservative estimate.
var grossMonthlyIncome = grossIncome / 12;
var maxTotalMonthlyPayment = grossMonthlyIncome * 0.36; // 36% DTI guideline
// We need to estimate property taxes and homeowner's insurance.
// This is a rough estimate and can vary wildly by location and property type.
// Let's assume 1.2% of property value per year for taxes and 0.5% for insurance.
// We'll need to make an iterative assumption or a simpler approach for this calculator.
// For simplicity here, let's *estimate* a fixed amount for taxes/insurance, or a percentage of the *loan amount*.
// A common approach is to estimate PITI as a percentage of the desired loan amount.
// Let's assume taxes, insurance, and HOA fees combined are roughly 0.15% of the *loan value* per month.
// This is a *very* rough estimate. Real affordability depends heavily on actual property taxes and insurance.
// The goal is to find the maximum loan amount (L) such that:
// Monthly P&I + Monthly Taxes/Insurance <= maxTotalMonthlyPayment – existingDebts
// The monthly P&I payment (M) can be calculated using the mortgage payment formula:
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where:
// P = Principal loan amount (what we want to find)
// i = monthly interest rate (annualRate / 12)
// n = total number of payments (loanTerm * 12)
// Let's assume taxes/insurance/HOA is 0.15% of the loan amount per month (this is a simplification)
// So, Monthly P&I = maxTotalMonthlyPayment – existingDebts – (LoanAmount * 0.0015)
// Rearranging the P&I formula to solve for P (Loan Amount):
// P = M * [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var monthlyInterestRate = interestRate / 12;
var numberOfPayments = loanTerm * 12;
// We need to solve for Loan Amount (L) in the equation:
// M(L) + T&I(L) = MaxAffordablePayment – ExistingDebts
// M(L) is the P&I payment for loan amount L.
// T&I(L) is the estimated taxes and insurance for loan amount L.
// MaxAffordablePayment is grossMonthlyIncome * 0.36
// ExistingDebts is the input value.
// This equation is complex to solve directly for L because M(L) is a function of L, and T&I(L) is also often estimated based on L.
// A common simplifying approach for calculators is to:
// 1. Calculate the maximum *affordable monthly P&I payment*.
// 2. Use this P&I payment to determine the maximum loan amount.
// This implicitly assumes that taxes and insurance are a fixed amount or are handled separately by the lender's DTI calculation.
// Let's calculate the maximum affordable *monthly mortgage payment* (including P&I, taxes, insurance, HOA – PITI)
// using the 28% gross income rule for housing expenses.
var maxAffordableHousingPayment = grossMonthlyIncome * 0.28;
// Now, we need to subtract estimated property taxes, homeowner's insurance, and HOA fees from this.
// This is where it gets tricky for a simple calculator. These vary wildly.
// A common convention for calculators is to *exclude* these or make a very general assumption.
// Let's *assume* for this calculator that the 36% DTI guideline (which includes PITI + other debts) is the primary constraint,
// and we will calculate the maximum *principal and interest* payment that fits within the remaining DTI allowance.
var maxMonthlyPI = maxTotalMonthlyPayment – existingDebts;
if (maxMonthlyPI <= 0) {
resultDiv.innerHTML = "Based on your existing debts, you may not be able to afford a mortgage payment.";
resultDiv.style.color = "red";
return;
}
// Now, use the mortgage payment formula (inverted) to find the loan principal (P) given the maximum monthly payment (M)
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// P = M * [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
if (denominator === 0) { // Avoid division by zero if monthlyInterestRate is 0 (though validation should prevent this)
resultDiv.innerHTML = "Invalid interest rate provided.";
resultDiv.style.color = "red";
return;
}
var maxLoanAmount = maxMonthlyPI * (numerator / denominator);
// The estimated affordability is the loan amount plus the down payment.
// However, affordability calculators usually show the *maximum loan amount* you can borrow.
// Let's display both for clarity.
var estimatedMaxLoan = maxLoanAmount; // This is the maximum principal amount you can borrow
var estimatedHomeAffordability = estimatedMaxLoan + downPayment; // This is the total value of home you could potentially buy
if (estimatedMaxLoan <= 0) {
resultDiv.innerHTML = "Based on your income and debts, the estimated maximum loan amount is $0.";
resultDiv.style.color = "red";
} else {
resultDiv.innerHTML = "Estimated Maximum Loan Amount: $" + estimatedMaxLoan.toFixed(2) + "" +
"Estimated Home Value You Could Afford (incl. down payment): $" + estimatedHomeAffordability.toFixed(2);
}
}