This calculator helps you estimate how much you might be able to borrow for a mortgage based on your income, debts, and desired loan term.
Your Estimated Maximum Mortgage Amount:
function calculateAffordability() {
var grossAnnualIncome = parseFloat(document.getElementById("grossAnnualIncome").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").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("result");
var maxMortgageAmountSpan = document.getElementById("maxMortgageAmount");
var estimatedMonthlyPaymentSpan = document.getElementById("estimatedMonthlyPayment");
// Clear previous results
resultDiv.style.display = "none";
maxMortgageAmountSpan.textContent = "";
estimatedMonthlyPaymentSpan.textContent = "";
// Validate inputs
if (isNaN(grossAnnualIncome) || grossAnnualIncome <= 0 ||
isNaN(monthlyDebtPayments) || monthlyDebtPayments < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
// Lender's typical debt-to-income ratio (DTI) limits.
// Front-end DTI (housing costs) is often around 28% of gross monthly income.
// Back-end DTI (total debt) is often around 36% of gross monthly income.
var maxHousingExpenseRatio = 0.28;
var maxTotalDebtRatio = 0.36;
var grossMonthlyIncome = grossAnnualIncome / 12;
var maxAllowedMonthlyPayment = grossMonthlyIncome * maxTotalDebtRatio;
var maxHousingPayment = grossMonthlyIncome * maxHousingExpenseRatio; // This is the maximum allowed for PITI (Principal, Interest, Taxes, Insurance)
// Calculate the maximum monthly debt payment allowed, considering existing debts
var maxAdditionalMonthlyPayment = maxAllowedMonthlyPayment – monthlyDebtPayments;
// The actual maximum monthly mortgage payment (PITI) we can afford is limited by both the total DTI and the housing-specific DTI.
// We'll use the lower of the two to be conservative.
var affordableMonthlyMortgagePayment = Math.min(maxAdditionalMonthlyPayment, maxHousingPayment);
if (affordableMonthlyMortgagePayment 0) {
maxLoanAmount = affordableMonthlyMortgagePayment * (1 – Math.pow(1 + monthlyInterestRate, -loanTermMonths)) / monthlyInterestRate;
} else { // Handle zero interest rate scenario
maxLoanAmount = affordableMonthlyMortgagePayment * loanTermMonths;
}
// The maximum mortgage amount the borrower can afford is the maximum loan amount plus their down payment.
var estimatedMaximumMortgage = maxLoanAmount + downPayment;
// Calculate the estimated monthly payment for the determined max loan amount (this would be PITI)
// For simplicity, we'll just show the Principal and Interest part of the payment here.
// A full PITI calculation would require estimates for property taxes and homeowner's insurance.
var estimatedPrincipalInterestPayment = 0;
if (monthlyInterestRate > 0) {
estimatedPrincipalInterestPayment = maxLoanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths)) / (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1);
} else {
estimatedPrincipalInterestPayment = maxLoanAmount / loanTermMonths;
}
// Display results
maxMortgageAmountSpan.textContent = "$" + estimatedMaximumMortgage.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
estimatedMonthlyPaymentSpan.textContent = "Estimated Principal & Interest: $" + estimatedPrincipalInterestPayment.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + " per month";
resultDiv.style.display = "block";
}
Understanding Mortgage Affordability
Buying a home is a significant financial milestone, and understanding how much mortgage you can afford is crucial. A mortgage affordability calculator is a powerful tool that helps potential homebuyers estimate their borrowing capacity by considering several key financial factors.
Key Factors in Mortgage Affordability:
Gross Annual Income: This is your income before taxes and other deductions. Lenders use this as a primary indicator of your ability to repay a loan. A higher income generally means a higher potential borrowing capacity.
Existing Monthly Debt Payments: This includes minimum payments on credit cards, student loans, auto loans, personal loans, and any other recurring debts. Lenders look at your total debt burden to ensure you can manage new payments alongside existing obligations.
Down Payment: The amount of money you pay upfront towards the purchase price of the home. A larger down payment reduces the amount you need to borrow, thereby lowering your loan amount and potentially your monthly payments. It also signifies financial commitment.
Annual Interest Rate: This is the cost of borrowing money, expressed as a percentage of the principal loan amount. Even small differences in interest rates can significantly impact your monthly payments and the total interest paid over the life of the loan.
Loan Term (Years): This is the duration over which you agree to repay the mortgage. Common terms are 15, 20, or 30 years. Shorter loan terms typically result in higher monthly payments but less interest paid overall, while longer terms mean lower monthly payments but more interest paid over time.
How the Calculator Works:
Our Mortgage Affordability Calculator simplifies this complex process. It typically uses common lending guidelines to estimate your borrowing power. Lenders often assess affordability using debt-to-income (DTI) ratios:
Housing DTI (Front-end Ratio): This ratio compares your potential monthly housing expenses (principal, interest, taxes, and insurance – often called PITI) to your gross monthly income. A common guideline is that PITI should not exceed 28% of your gross monthly income.
Total DTI (Back-end Ratio): This ratio compares all your monthly debt obligations (including the potential mortgage payment) to your gross monthly income. A typical maximum for this ratio is around 36%, though it can vary.
The calculator first determines how much you can afford for a monthly mortgage payment by considering these DTI ratios and your existing debts. It then works backward to calculate the maximum loan amount you could qualify for based on that affordable monthly payment, the interest rate, and the loan term. Finally, it adds your down payment to estimate the total home price you might be able to afford.
Important Considerations:
This is an Estimate: This calculator provides an estimate. Actual loan offers from lenders may differ based on their specific underwriting criteria, credit score, loan programs, and market conditions.
PITI Components: The calculator primarily focuses on principal and interest. Remember to factor in potential costs for property taxes, homeowner's insurance, and possibly Private Mortgage Insurance (PMI) or HOA fees, which will increase your actual monthly housing payment.
Credit Score: Your credit score significantly influences the interest rate you'll be offered. A higher credit score generally leads to lower rates and greater affordability.
Closing Costs: Don't forget to budget for closing costs, which are separate from your down payment and can include appraisal fees, title insurance, attorney fees, and more.
Using this calculator is a great first step in your home-buying journey to gain a clearer picture of your financial possibilities.