Determining how much mortgage you can afford is a crucial step in the home-buying process. This calculator helps you estimate your potential borrowing power by considering your income, down payment, current debts, and the prevailing interest rates and loan terms.
Lenders typically use debt-to-income (DTI) ratios to assess your ability to repay a loan. There are two common DTI ratios they consider:
Front-End DTI (Housing Ratio): This ratio compares your potential total monthly housing expenses (including mortgage principal and interest, property taxes, homeowners insurance, and HOA fees – often referred to as PITI) to your gross monthly income. Lenders generally prefer this ratio to be no more than 28%.
Back-End DTI (Total Debt Ratio): This ratio compares your total monthly debt obligations (including the potential mortgage payment plus all other recurring debts like car loans, student loans, and credit card minimum payments) to your gross monthly income. Lenders often look for this to be no more than 36%, though this can vary.
This calculator focuses on a simplified estimation of your maximum affordable loan amount based on a common lender guideline (often around a 36% back-end DTI, adjusted for your existing debts and income). It's important to remember that this is an estimate. Your actual borrowing capacity will depend on the specific lender, your credit score, the property itself, and various other factors.
How it works:
Gross Monthly Income: Your annual income is divided by 12 to get your gross monthly income.
Available for Housing & Debt: A percentage of your gross monthly income is allocated for total debt payments (this calculator uses a common guideline).
Maximum Monthly Debt Payment: This is calculated by subtracting your existing monthly debt payments from the total allocated for debt.
Maximum Affordable Loan: Using the estimated interest rate and loan term, we calculate the maximum loan amount that results in a monthly payment within your affordable range. This amount is then adjusted by your down payment to estimate the maximum home price you might afford.
Example:
If your annual household income is $90,000, you have a $20,000 down payment, an estimated interest rate of 6.0%, a 30-year loan term, and $500 in existing monthly debt payments.
Gross Monthly Income = $90,000 / 12 = $7,500
Assuming a 36% DTI ratio, total monthly debt capacity = $7,500 * 0.36 = $2,700
Maximum monthly mortgage payment = $2,700 – $500 (existing debt) = $2,200
Using a mortgage calculator with a $2,200 monthly payment, 6.0% interest, and 30 years, the maximum loan amount is approximately $367,000.
Estimated Maximum Home Price = $367,000 (loan amount) + $20,000 (down payment) = $387,000
Disclaimer: This calculator provides an estimate for informational purposes only and does not constitute financial advice. Consult with a mortgage professional for accurate pre-approval and personalized advice.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var resultDiv = document.getElementById("mortgage-result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(annualIncome) || annualIncome <= 0) {
resultDiv.innerHTML = "Please enter a valid annual household income.";
return;
}
if (isNaN(downPayment) || downPayment < 0) {
resultDiv.innerHTML = "Please enter a valid down payment amount.";
return;
}
if (isNaN(interestRate) || interestRate <= 0) {
resultDiv.innerHTML = "Please enter a valid interest rate (greater than 0).";
return;
}
if (isNaN(loanTermYears) || loanTermYears <= 0) {
resultDiv.innerHTML = "Please enter a valid loan term in years.";
return;
}
if (isNaN(monthlyDebt) || monthlyDebt < 0) {
resultDiv.innerHTML = "Please enter a valid existing monthly debt amount.";
return;
}
var grossMonthlyIncome = annualIncome / 12;
var loanTermMonths = loanTermYears * 12;
var annualInterestRateDecimal = interestRate / 100;
var monthlyInterestRate = annualInterestRateDecimal / 12;
// Lender's guideline for maximum total DTI (e.g., 36%)
var maxDtiRatio = 0.36;
var maxTotalMonthlyDebtPayment = grossMonthlyIncome * maxDtiRatio;
var maxMortgagePayment = maxTotalMonthlyDebtPayment – monthlyDebt;
if (maxMortgagePayment 0) {
maxLoanAmount = maxMortgagePayment * (1 – Math.pow(1 + monthlyInterestRate, -loanTermMonths)) / monthlyInterestRate;
} else { // Handle case for 0% interest rate (though rare for mortgages)
maxLoanAmount = maxMortgagePayment * loanTermMonths;
}
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
// Format results
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedEstimatedMaxHomePrice = estimatedMaxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedGrossMonthlyIncome = grossMonthlyIncome.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxMortgagePayment = maxMortgagePayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML =
"Estimated Maximum Affordable Loan Amount: " + formattedMaxLoanAmount + "" +
"Estimated Maximum Home Price: " + formattedEstimatedMaxHomePrice + "" +
"(Based on gross monthly income of " + formattedGrossMonthlyIncome + " and a maximum affordable mortgage payment of " + formattedMaxMortgagePayment + ")";
}
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