Use this calculator to estimate how much home you can afford based on your income, debts, and desired monthly payment.
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. This calculator helps you estimate your potential purchasing power by considering several key factors:
Annual Gross Income:
This is your income before taxes and other deductions. Lenders use this to assess your ability to repay a loan.
Down Payment:
The upfront cash you pay towards the purchase price of the home. A larger down payment reduces the loan amount needed and can lead to better loan terms.
Estimated Monthly Debt Payments:
This includes all your recurring monthly financial obligations, such as car loans, student loans, credit card minimum payments, and personal loans. Lenders often look at your debt-to-income ratio (DTI), and these payments are a significant part of that calculation.
Estimated Annual Interest Rate:
This is the annual percentage charged by the lender on the loan. Mortgage rates fluctuate based on market conditions and your creditworthiness. A lower interest rate means lower monthly payments and less interest paid over the life of the loan.
Loan Term (Years):
This is the duration over which you will repay the mortgage. Common terms are 15 and 30 years. Longer terms result in lower monthly payments but higher total interest paid, while shorter terms have higher monthly payments but lower total interest paid.
Desired Maximum Monthly Mortgage Payment:
This is the absolute highest amount you are comfortable spending each month on your mortgage payment (principal and interest only). It's important to set a realistic budget that fits your lifestyle and other financial goals.
How the Calculation Works:
This calculator works backward. It first calculates the maximum loan amount you can afford based on your desired monthly payment, interest rate, and loan term. Then, it subtracts your down payment from this maximum loan amount to estimate the maximum home price you can afford. It also considers your debt-to-income ratio (DTI) to ensure your total monthly debt obligations (including the estimated new mortgage payment) don't exceed typical lender limits, usually around 43% of your gross monthly income.
Important Considerations:
Pre-Approval: This calculator provides an estimate. For an accurate picture, get pre-approved by a mortgage lender.
Total Housing Costs: This calculator focuses on principal and interest. Remember to budget for property taxes, homeowner's insurance, and potentially Private Mortgage Insurance (PMI) or Homeowners Association (HOA) fees, which will increase your total monthly housing expense.
Closing Costs: Factor in additional costs associated with closing the loan, which can be several percent of the loan amount.
Credit Score: Your credit score significantly impacts the interest rate you'll be offered.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var estimatedMonthlyDebts = parseFloat(document.getElementById("estimatedMonthlyDebts").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var desiredMaxPayment = parseFloat(document.getElementById("desiredMaxPayment").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(estimatedMonthlyDebts) || estimatedMonthlyDebts < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0 ||
isNaN(desiredMaxPayment) || desiredMaxPayment <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// — Affordability Calculation —
// Maximum acceptable total monthly debt (using a common DTI of 43%)
var grossMonthlyIncome = annualIncome / 12;
var maxTotalMonthlyDebt = grossMonthlyIncome * 0.43;
// Maximum allowed monthly mortgage payment (P&I)
var maxMortgagePaymentAllowed = maxTotalMonthlyDebt – estimatedMonthlyDebts;
if (maxMortgagePaymentAllowed 0) {
maxLoanAmount = actualMaxMortgagePayment * (1 – Math.pow(1 + monthlyInterestRate, -loanTermMonths)) / monthlyInterestRate;
} else { // Handle zero interest rate case
maxLoanAmount = actualMaxMortgagePayment * loanTermMonths;
}
// Calculate the estimated maximum affordable home price
var maxAffordableHomePrice = maxLoanAmount + downPayment;
// — Display Results —
resultDiv.innerHTML += "
Estimated Affordability:
";
resultDiv.innerHTML += "Based on your inputs, your estimated maximum affordable home price is: $" + maxAffordableHomePrice.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "";
resultDiv.innerHTML += "This calculation is based on a maximum monthly mortgage payment (Principal & Interest) of approximately: $" + actualMaxMortgagePayment.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "";
resultDiv.innerHTML += "The maximum loan amount you could qualify for is approximately: $" + maxLoanAmount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "";
resultDiv.innerHTML += "Note: This is an estimate. Your actual affordability may vary based on lender's specific criteria, credit score, down payment, and other factors. Remember to factor in taxes, insurance, and potential PMI.";
}
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