Mortgage Affordability Calculator
.calculator-wrapper {
font-family: sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #e0e0e0;
border-radius: 8px;
background-color: #f9f9f9;
}
.calculator-title {
text-align: center;
color: #333;
margin-bottom: 25px;
}
.form-field {
margin-bottom: 15px;
}
.form-field label {
display: block;
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.form-field input {
width: calc(100% – 12px);
padding: 8px;
border: 1px solid #ccc;
border-radius: 4px;
box-sizing: border-box;
}
.calculate-button {
display: block;
width: 100%;
padding: 10px 15px;
background-color: #4CAF50;
color: white;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 16px;
transition: background-color 0.3s ease;
}
.calculate-button:hover {
background-color: #45a049;
}
.calculator-result {
margin-top: 20px;
padding: 15px;
border: 1px solid #d0e0d0;
border-radius: 4px;
background-color: #e9ffe9;
color: #333;
text-align: center;
font-size: 1.1em;
}
.calculator-result strong {
color: #27ae60;
}
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var debtToIncomeRatio = parseFloat(document.getElementById("debtToIncomeRatio").value) / 100; // Convert percentage to decimal
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value) / 100; // Convert percentage to decimal
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
if (isNaN(annualIncome) || isNaN(debtToIncomeRatio) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) ||
annualIncome <= 0 || debtToIncomeRatio <= 0 || interestRate < 0 || loanTerm <= 0) {
resultDiv.innerHTML = "
Error: Please enter valid positive numbers for all fields.";
return;
}
// Maximum monthly PITI (Principal, Interest, Taxes, Insurance) payment allowed
var maxMonthlyPayment = annualIncome / 12 * debtToIncomeRatio;
// Calculate maximum loan amount based on the maximum monthly payment
// Using the mortgage payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where:
// M = Monthly Payment (maxMonthlyPayment)
// P = Principal Loan Amount (what we want to find)
// i = Monthly interest rate (interestRate / 12)
// n = Total number of payments (loanTerm * 12)
var monthlyInterestRate = interestRate / 12;
var numberOfPayments = loanTerm * 12;
// Handle edge case where monthlyInterestRate is 0
var maxLoanAmount;
if (monthlyInterestRate === 0) {
if (numberOfPayments > 0) {
maxLoanAmount = maxMonthlyPayment * numberOfPayments;
} else {
maxLoanAmount = 0; // Cannot calculate if no payments
}
} else {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
var principalFactor = (factor – 1) / (monthlyInterestRate * factor);
maxLoanAmount = maxMonthlyPayment * principalFactor;
}
// Calculate maximum home price
var maxHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML = "Based on your inputs, your estimated maximum affordable home price is:
$" + maxHomePrice.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",") + "";
resultDiv.innerHTML += "This assumes your maximum total housing payment (including principal, interest, taxes, and insurance) is no more than $" + maxMonthlyPayment.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",") + " per month.";
resultDiv.innerHTML += "The estimated maximum loan amount you could qualify for is:
$" + maxLoanAmount.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",") + ".";
}
Understanding Mortgage Affordability
Determining how much home you can afford is a crucial step in the home-buying process. It's not just about finding a house you like; it's about finding a house that fits your financial reality comfortably. The Mortgage Affordability Calculator helps you estimate the maximum home price you might be able to afford based on your income, debts, and desired loan terms.
Key Factors in Affordability Calculations:
- Annual Household Income: This is your total gross income from all sources before taxes. Lenders use this as a primary indicator of your ability to repay a loan.
- Debt-to-Income Ratio (DTI): This is a key metric lenders use. It's calculated by dividing your total monthly debt payments (including potential mortgage payments, credit card payments, student loans, car loans, etc.) by your gross monthly income. A lower DTI generally indicates a lower risk for lenders and can allow you to borrow more. Common targets are often around 35-43%, but this can vary significantly by lender and loan type.
- Down Payment: This is the upfront cash you pay towards the purchase price of the home. A larger down payment reduces the loan amount needed, which can lower your monthly payments and potentially help you avoid private mortgage insurance (PMI).
- Interest Rate: The annual interest rate on your mortgage significantly impacts your monthly payment and the total cost of the loan over time. Even small changes in the interest rate can affect affordability.
- Loan Term: This is the length of time you have to repay the mortgage, typically 15, 20, or 30 years. Longer loan terms result in lower monthly payments but you'll pay more interest over the life of the loan.
How the Calculator Works:
The calculator first determines your maximum allowable monthly debt payment by applying your target Debt-to-Income Ratio to your annual income (divided by 12 for monthly). Then, it uses a standard mortgage payment formula to calculate the maximum loan amount you could afford with that monthly payment, considering the interest rate and loan term.
Finally, it adds your specified down payment to this maximum loan amount to estimate the highest home price you could potentially afford. Remember, this is an estimate. Actual loan approval depends on many other factors, including your credit score, employment history, existing debts, and the lender's specific underwriting criteria.
Example Scenario:
Let's say you have an Annual Household Income of $90,000. You want to keep your total monthly debt payments (including your new mortgage) to a maximum of 36% of your income. You have a Down Payment of $30,000 saved. You're looking at a mortgage with an estimated Interest Rate of 6.8% and a Loan Term of 30 years.
- Your gross monthly income is $90,000 / 12 = $7,500.
- Your maximum monthly debt payment would be $7,500 * 0.36 = $2,700.
- Assuming this $2,700 covers your principal, interest, taxes, and insurance (PITI), the calculator would then determine the maximum loan you could get.
- With a 6.8% interest rate over 30 years, a $2,700 monthly payment could support a loan of approximately $416,000.
- Adding your $30,000 down payment, the estimated maximum affordable home price would be around $446,000.
This calculator provides a valuable starting point for your home-buying journey, helping you set realistic expectations and budget effectively.