Mortgage Affordability Calculator
.calculator-container {
font-family: sans-serif;
border: 1px solid #ddd;
padding: 20px;
border-radius: 8px;
max-width: 600px;
margin: 20px auto;
background-color: #f9f9f9;
}
.calculator-container h2 {
text-align: center;
margin-bottom: 20px;
color: #333;
}
.calculator-form .form-group {
margin-bottom: 15px;
}
.calculator-form label {
display: block;
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.calculator-form input[type="number"] {
width: calc(100% – 12px);
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 16px;
}
.calculator-form button {
display: block;
width: 100%;
padding: 12px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 18px;
cursor: pointer;
transition: background-color 0.3s ease;
}
.calculator-form button:hover {
background-color: #0056b3;
}
#result {
margin-top: 25px;
padding: 15px;
background-color: #e9ecef;
border: 1px solid #ced4da;
border-radius: 4px;
font-size: 18px;
text-align: center;
color: #333;
}
#result p {
margin: 5px 0;
}
#result .important {
font-weight: bold;
color: #28a745;
font-size: 20px;
}
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebtPayments) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (annualIncome <= 0 || monthlyDebtPayments < 0 || downPayment < 0 || interestRate <= 0 || loanTerm maxHousingPayment) {
maxMortgagePayment = maxHousingPayment;
}
// If calculated max mortgage payment is negative, it means existing debts exceed income ratio
if (maxMortgagePayment 0) {
// Formula for present value of an annuity (loan amount)
// PV = PMT * [1 – (1 + r)^-n] / r
maxLoanAmount = maxMortgagePayment * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
// If interest rate is 0 (unlikely but for calculation robustness)
maxLoanAmount = maxMortgagePayment * numberOfPayments;
}
// The maximum affordable home price is the max loan amount plus the down payment
var maxAffordablePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML =
"Maximum Monthly Mortgage Payment (P&I):
$" + maxMortgagePayment.toFixed(2) + "" +
"Estimated Maximum Loan Amount:
$" + maxLoanAmount.toFixed(2) + "" +
"Estimated Maximum Affordable Home Price:
$" + maxAffordablePrice.toFixed(2) + "";
}
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. Lenders use several factors to assess your borrowing capacity, with the Debt-to-Income (DTI) ratio being one of the most significant. The DTI compares your total monthly debt payments to your gross monthly income. Lenders typically look at two DTI figures:
- Front-end DTI (Housing Ratio): This ratio considers only your proposed housing costs (principal, interest, property taxes, and homeowners insurance – often called PITI) and divides it by your gross monthly income. A common guideline is that this shouldn't exceed 28%.
- Back-end DTI (Total Debt Ratio): This ratio includes all your monthly debt obligations – including your proposed PITI, car loans, student loans, credit card minimum payments, and other recurring debts – divided by your gross monthly income. A common guideline is that this shouldn't exceed 36%.
Our calculator uses these common DTI guidelines to estimate your affordability. It first calculates the maximum monthly payment you can afford for housing (principal and interest, P&I) by subtracting your existing monthly debt payments from the portion of your income allocated to total debt. Then, it works backward to determine the maximum loan amount you can qualify for based on that P&I payment, the interest rate, and the loan term. Finally, it adds your down payment to the estimated maximum loan amount to give you an estimated maximum affordable home price.
Important Considerations:
- PITI vs. P&I: This calculator primarily focuses on Principal and Interest (P&I) for the loan amount. Remember to factor in property taxes, homeowners insurance, and potentially Private Mortgage Insurance (PMI) or Homeowners Association (HOA) dues, as these will increase your total monthly housing payment (PITI).
- Lender Variations: DTI ratios and qualification criteria can vary significantly between lenders and loan programs. Some loan types (like FHA loans) may allow for higher DTI ratios.
- Credit Score: Your credit score heavily influences the interest rate you'll be offered and can impact your overall qualification.
- Other Debts: Ensure you accurately list all your monthly debt obligations. This includes credit card minimum payments, not just balances.
- Closing Costs: This calculator does not account for closing costs, which can be several thousand dollars.
- Affordability vs. Qualification: While this calculator provides an estimate of what lenders might approve, it's also essential to consider what you feel comfortable paying monthly out of your budget.
Use this tool as a starting point to understand your potential borrowing power. It's highly recommended to speak with a mortgage professional for a personalized assessment.