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 may qualify for based on your income, debts, and estimated housing expenses.
How Much House Can You Afford?
Determining your mortgage affordability involves understanding the key factors lenders consider and how they translate into a monthly payment you can manage. This calculator estimates the maximum loan amount you might qualify for, but it's essential to remember that this is an estimate. Actual loan approval depends on a lender's specific underwriting criteria, your credit score, employment history, and other financial details.
Key Factors Explained:
Gross Monthly Income: This is your income before taxes and other deductions. Lenders use this as a baseline for your repayment ability.
Total Monthly Debt Payments: This includes all your recurring monthly debt obligations, such as credit card payments, student loans, car loans, and personal loans. These are subtracted from your income to determine your disposable income.
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 impact your interest rate and PMI costs.
Interest Rate: The percentage charged by the lender on the loan principal. A lower interest rate means lower monthly payments.
Loan Term: The period over which you agree to repay the loan, typically 15 or 30 years. Longer terms have lower monthly payments but result in more interest paid over time.
Property Taxes: Taxes levied by local governments on your property. These are usually paid monthly as part of your mortgage escrow.
Homeowners Insurance: Protects your home against damage or loss. This is also typically paid monthly via escrow.
Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home's purchase price, lenders usually require PMI to protect themselves against potential default. This cost is added to your monthly payment.
The Calculation (Simplified):
This calculator uses common lending guidelines, often referred to as the "front-end" and "back-end" ratios. A typical guideline is that your total housing costs (Principal, Interest, Taxes, Insurance – PITI) should not exceed 28% of your gross monthly income, and your total debt obligations (including PITI) should not exceed 36% of your gross monthly income. This calculator focuses on estimating the maximum loan based on these principles and your provided inputs.
Disclaimer: This calculator provides an estimate for informational purposes only. It is not a loan offer or a guarantee of loan approval. Consult with a mortgage professional for personalized advice and to get pre-approved.
function calculateMortgageAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var estimatedInterestRate = parseFloat(document.getElementById("estimatedInterestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var estimatedPropertyTaxesPercent = parseFloat(document.getElementById("estimatedPropertyTaxes").value);
var estimatedHomeownersInsurance = parseFloat(document.getElementById("estimatedHomeownersInsurance").value);
var estimatedPrivateMortgageInsurance = parseFloat(document.getElementById("estimatedPrivateMortgageInsurance").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(grossMonthlyIncome) || grossMonthlyIncome <= 0 ||
isNaN(monthlyDebtPayments) || monthlyDebtPayments < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(estimatedInterestRate) || estimatedInterestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(estimatedPropertyTaxesPercent) || estimatedPropertyTaxesPercent < 0 ||
isNaN(estimatedHomeownersInsurance) || estimatedHomeownersInsurance < 0 ||
isNaN(estimatedPrivateMortgageInsurance) || estimatedPrivateMortgageInsurance < 0) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// — Calculation Logic —
// Maximum allowable monthly housing payment (PITI) based on 28% rule
var maxMonthlyHousingPayment = grossMonthlyIncome * 0.28;
// Maximum allowable total monthly debt payment (36% rule)
var maxTotalMonthlyDebt = grossMonthlyIncome * 0.36;
// Maximum allowable mortgage payment (Principal + Interest)
var maxMonthlyPrincipalInterest = maxTotalMonthlyDebt – monthlyDebtPayments;
// Ensure maxMonthlyPrincipalInterest is not negative
if (maxMonthlyPrincipalInterest = targetMonthlyPITI) {
resultDiv.innerHTML = "Based on your inputs, you may not be able to afford a mortgage at this time.";
return;
}
// The amount available for Principal and Interest
var availableForPI = targetMonthlyPITI – (estimatedHomeownersInsurance / 12) – (estimatedPrivateMortgageInsurance / 12);
// Adjust availableForPI by estimated monthly property taxes. We need to estimate the property tax based on the eventual loan amount.
// This is an iterative or estimation problem. For simplicity, we'll assume a starting point for property tax calculation.
// A common approach is to consider property tax as a percentage of the *home price*. Since we don't know the home price yet,
// we'll make an educated guess or use a simplified approach where we assume the estimatedPropertyTaxesPercent is applied to the *loan amount* for estimation.
// A more accurate calculation would involve solving for the home price iteratively.
// For this simplified calculator, let's directly calculate the loan amount.
var monthlyInterestRate = (estimatedInterestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var maxLoanAmount = 0;
if (monthlyInterestRate > 0) {
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
// Where:
// P = Principal loan amount
// M = Monthly mortgage payment (availableForPI minus estimated monthly property taxes)
// i = Monthly interest rate
// n = Number of payments
// Property tax is usually a percentage of the *home price*. Let's approximate it.
// If we assume property tax is X% of the *loan amount* for estimation purposes:
// availableForPI = estimatedMonthlyPropertyTax + P * (1 + i)^n – 1] / [ i(1 + i)^n ]
// availableForPI = (loan_amount * estimatedPropertyTaxesPercent / 100 / 12) + P * monthly_payment_factor
// This is complex. A common simplification is to deduct the estimated monthly tax and insurance BEFORE calculating P and I.
// However, property tax is usually based on home value, not loan value.
// Let's try a simpler approach: Calculate the max loan *without* property tax first, then estimate the price and re-evaluate.
// Or, even simpler: Assume property tax is part of the "PITI" budget.
// The user inputs "% of home price" for taxes, which is tricky. We have to estimate the home price.
// A robust way is to iterate:
// 1. Estimate a home price (e.g., loan amount + down payment).
// 2. Calculate monthly property tax based on this estimate.
// 3. Calculate the loan amount that results in PITI using this tax.
// 4. Check if the total price (loan + down payment) is consistent with the calculated tax.
// Let's use a common shortcut: Assume Property Tax, Homeowners Insurance, and PMI are also included in the monthly payment budget and need to be accounted for.
// We'll adjust the availableForPI for Property Tax and then calculate the loan.
// To get the monthly property tax, we need the home price.
// Home Price = Loan Amount + Down Payment
// Estimated Monthly Property Tax = (Loan Amount + Down Payment) * (estimatedPropertyTaxesPercent / 100) / 12
// So, availableForPI = Estimated Monthly Property Tax + Monthly P&I Payment
// availableForPI = (Loan Amount + Down Payment) * (estimatedPropertyTaxesPercent / 100) / 12 + LoanAmount * [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Let's define P = Loan Amount, H = Home Price = P + downPayment
// availableForPI = (H * tax_rate_percent / 100 / 12) + P * monthly_payment_factor
// availableForPI = ((P + downPayment) * tax_rate_percent / 100 / 12) + P * monthly_payment_factor
// Rearranging to solve for P:
// var R = (tax_rate_percent / 100 / 12) // Monthly tax rate factor
// var MPF = monthly_payment_factor // Monthly Principal & Interest payment factor for $1 loan
// availableForPI = (P * R) + (downPayment * R) + (P * MPF)
// availableForPI – (downPayment * R) = P * R + P * MPF
// availableForPI – (downPayment * R) = P * (R + MPF)
// P = (availableForPI – (downPayment * R)) / (R + MPF)
var monthlyTaxRateFactor = (estimatedPropertyTaxesPercent / 100) / 12;
var monthlyPIFactor = 0;
if (monthlyInterestRate > 0) {
monthlyPIFactor = (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else { // Handle 0% interest rate case for monthly payment calculation
monthlyPIFactor = 1 / numberOfPayments;
}
var maxLoanAmount = (availableForPI – (downPayment * monthlyTaxRateFactor)) / (monthlyTaxRateFactor + monthlyPIFactor);
// Ensure the calculated loan amount is not negative
if (maxLoanAmount < 0) {
maxLoanAmount = 0;
}
} else { // Handle 0% interest rate
// In a 0% interest rate scenario, the loan amount is simply the total amount that can be paid off over the term.
// Max Principal = availableForPI / (1 + monthlyTaxRateFactor) — this assumes tax is also paid from this budget.
// Or, if we assume tax is a percentage of home price, and we can pay off the principal directly:
// availableForPI = (Principal + DownPayment) * monthlyTaxRateFactor + Principal
// availableForPI – (DownPayment * monthlyTaxRateFactor) = Principal * (1 + monthlyTaxRateFactor)
// Principal = (availableForPI – (DownPayment * monthlyTaxRateFactor)) / (1 + monthlyTaxRateFactor)
var monthlyTaxRateFactor = (estimatedPropertyTaxesPercent / 100) / 12;
maxLoanAmount = (availableForPI – (downPayment * monthlyTaxRateFactor)) / (1 + monthlyTaxRateFactor);
if (maxLoanAmount 0) {
monthlyPrincipalAndInterest = maxLoanAmount * monthlyPIFactor;
} else {
monthlyPrincipalAndInterest = maxLoanAmount / numberOfPayments;
}
var totalMonthlyHousingCosts = monthlyPrincipalAndInterest + estimatedMonthlyPropertyTax + (estimatedHomeownersInsurance / 12) + (estimatedPrivateMortgageInsurance / 12);
var totalMonthlyDebtObligations = monthlyDebtPayments + totalMonthlyHousingCosts;
// — Display Results —
var affordabilityMessage = "";
if (maxLoanAmount <= 0) {
affordabilityMessage = "Based on your inputs and common lending guidelines, your estimated maximum loan amount is $0. You may need to adjust your income, debt, down payment, or consider a less expensive home.";
} else {
affordabilityMessage = "Your estimated maximum mortgage loan amount is: $" + maxLoanAmount.toFixed(2) + "";
affordabilityMessage += "This suggests you might be able to afford a home priced around: $" + estimatedHomePrice.toFixed(2) + " (Loan Amount + Down Payment)";
affordabilityMessage += "Estimated total monthly housing payment (PITI): $" + totalMonthlyHousingCosts.toFixed(2) + "";
affordabilityMessage += "Estimated monthly Principal & Interest: $" + monthlyPrincipalAndInterest.toFixed(2) + "";
affordabilityMessage += "Estimated monthly Property Taxes: $" + estimatedMonthlyPropertyTax.toFixed(2) + "";
affordabilityMessage += "Estimated monthly Homeowners Insurance: $" + (estimatedHomeownersInsurance / 12).toFixed(2) + "";
affordabilityMessage += "Estimated monthly PMI: $" + (estimatedPrivateMortgageInsurance / 12).toFixed(2) + "";
affordabilityMessage += "Your total estimated monthly debt obligations (including housing) would be: $" + totalMonthlyDebtObligations.toFixed(2) + "";
// Check against the 36% rule for total debt
if (totalMonthlyDebtObligations > maxTotalMonthlyDebt) {
affordabilityMessage += "Note: Your estimated total monthly debt obligations may exceed the typical 36% guideline based on your income and current debts.";
}
}
resultDiv.innerHTML = affordabilityMessage;
}
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