Mortgage Affordability Calculator
Understanding how much house you can afford is a crucial first step in the home-buying process. This mortgage affordability calculator helps you estimate the maximum mortgage loan you might qualify for based on your income, debts, and down payment. It considers factors like your gross monthly income, monthly debt payments, and the estimated interest rate and loan term.
How Mortgage Affordability is Calculated
Lenders use specific ratios to determine how much they are willing to lend you. The two primary ratios are the front-end ratio (housing ratio) and the back-end ratio (debt-to-income ratio or DTI).
- Front-end Ratio: This ratio compares your estimated total monthly housing expenses (principal, interest, taxes, insurance, and HOA fees – often called PITI) to your gross monthly income. Lenders typically prefer this to be no more than 28% of your gross monthly income, though this can vary.
- Back-end Ratio (DTI): This ratio compares all of your monthly debt obligations (including your potential mortgage payment, credit card payments, student loans, auto loans, etc.) to your gross monthly income. A common guideline is for this ratio to be no more than 36% of your gross monthly income, but again, this can vary significantly by lender and loan type. Some loan programs, like FHA loans, may allow for higher DTIs.
This calculator provides an estimate of the maximum loan amount you might qualify for. It simplifies the calculation by focusing on the back-end DTI ratio, assuming a maximum of 36% of your gross monthly income is available for all debts, including the mortgage payment. It then subtracts your existing monthly debt payments and uses the remaining amount to estimate the maximum affordable mortgage payment. This estimated payment is then used to derive the maximum loan amount based on the provided interest rate and loan term.
Important Note: This is a simplified estimation tool. Actual mortgage approval depends on many factors, including your credit score, loan-to-value ratio, employment history, and the specific lending policies of financial institutions.
function calculateMortgageAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var totalMonthlyDebt = parseFloat(document.getElementById("totalMonthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var resultDiv = document.getElementById("mortgage-result");
resultDiv.innerHTML = ""; // Clear previous results
// — Input Validation —
if (isNaN(grossMonthlyIncome) || grossMonthlyIncome <= 0) {
resultDiv.innerHTML = "Please enter a valid Gross Monthly Income.";
return;
}
if (isNaN(totalMonthlyDebt) || totalMonthlyDebt < 0) { // Allow 0 debt
resultDiv.innerHTML = "Please enter a valid Total Monthly Debt Payments.";
return;
}
if (isNaN(downPayment) || downPayment < 0) { // Allow 0 down payment
resultDiv.innerHTML = "Please enter a valid Down Payment Amount.";
return;
}
if (isNaN(interestRate) || interestRate 20) { // Realistic range for interest rate
resultDiv.innerHTML = "Please enter a valid Annual Interest Rate (e.g., 5.0).";
return;
}
if (isNaN(loanTermYears) || loanTermYears 50) { // Realistic range for loan term
resultDiv.innerHTML = "Please enter a valid Loan Term in Years (e.g., 30).";
return;
}
// — Calculation Logic —
// Assume a maximum DTI ratio (e.g., 36%)
var maxDtiRatio = 0.36;
// Calculate the maximum amount of income that can go towards all debts
var maxTotalDebtPayment = grossMonthlyIncome * maxDtiRatio;
// Calculate the maximum affordable monthly mortgage payment
var maxMortgagePayment = maxTotalDebtPayment – totalMonthlyDebt;
// Ensure the maximum mortgage payment is not negative
if (maxMortgagePayment 0) {
// Formula for present value of an ordinary annuity (used to find max loan amount)
// PV = PMT * [1 – (1 + r)^-n] / r
maxLoanAmount = maxMortgagePayment * (1 – Math.pow(1 + monthlyInterestRate, -loanTermMonths)) / monthlyInterestRate;
} else {
// If interest rate is 0, loan amount is simply payment * term
maxLoanAmount = maxMortgagePayment * loanTermMonths;
}
// The total purchase price you can afford is the loan amount plus your down payment
var maxPurchasePrice = maxLoanAmount + downPayment;
// — Display Results —
resultDiv.innerHTML = "
Your Estimated Affordability:
" +
"Based on your inputs, you could potentially afford a maximum loan amount of approximately
$" + maxLoanAmount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "." +
"This suggests a maximum home purchase price of approximately
$" + maxPurchasePrice.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + " (including your down payment)." +
"
Note: This calculation assumes a maximum debt-to-income ratio of " + (maxDtiRatio * 100) + "%.";
}
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font-family: Arial, sans-serif;
max-width: 700px;
margin: 20px auto;
padding: 20px;
border: 1px solid #e0e0e0;
border-radius: 8px;
background-color: #f9f9f9;
}
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#mortgage-calculator-wrapper button:hover {
background-color: #0056b3;
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margin-top: 25px;
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}
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}
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}