Buying a home is a significant financial decision, and understanding how much you can realistically afford for a mortgage is crucial. This mortgage affordability calculator helps you estimate the maximum loan amount you might be able to borrow based on your income, debts, and desired monthly payment.
Key Factors in Mortgage Affordability:
Gross Monthly Income: This is your total income before taxes and other deductions. Lenders look at this to determine your ability to repay.
Existing Monthly Debt Payments: This includes payments for credit cards, car loans, student loans, personal loans, and any other recurring debts. Lenders use this to calculate your debt-to-income ratio (DTI).
Estimated Monthly Mortgage Payment: This includes not just the principal and interest on your loan, but also property taxes, homeowners insurance, and potentially private mortgage insurance (PMI) or HOA fees. This is often referred to as PITI.
Interest Rate: The annual interest rate on the mortgage significantly impacts your monthly payment and the total interest paid over the life of the loan.
Loan Term: The length of the mortgage loan (e.g., 15 years, 30 years) affects your monthly payment. Shorter terms mean higher monthly payments but less interest paid overall.
Understanding Debt-to-Income Ratio (DTI): Lenders commonly use DTI to assess affordability. It's calculated as:
DTI = (Total Monthly Debt Payments + Estimated Monthly Mortgage Payment) / Gross Monthly Income
Most lenders prefer a DTI of 43% or lower, though some may go higher depending on other factors. This calculator helps you see what loan amount would keep your PITI within a reasonable DTI range.
Mortgage Affordability Calculator
Enter your financial details below to estimate your mortgage affordability.
function calculateMortgageAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var existingMonthlyDebt = parseFloat(document.getElementById("existingMonthlyDebt").value);
var interestRate = parseFloat(document.getElementById("interestRate").value) / 100;
var loanTermYears = parseInt(document.getElementById("loanTermYears").value);
var maxDTI = parseFloat(document.getElementById("maxDTI").value) / 100;
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(grossMonthlyIncome) || isNaN(existingMonthlyDebt) || isNaN(interestRate) || isNaN(loanTermYears) || isNaN(maxDTI)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (grossMonthlyIncome <= 0 || existingMonthlyDebt < 0 || interestRate < 0 || loanTermYears <= 0 || maxDTI <= 0) {
resultDiv.innerHTML = "Please enter positive values for income, term, and DTI, and non-negative for debt and interest rate.";
return;
}
// Calculate the maximum total monthly payment allowed based on DTI
var maxTotalMonthlyPayment = grossMonthlyIncome * maxDTI;
// Calculate the maximum allowed mortgage payment (PITI)
var maxMortgagePayment = maxTotalMonthlyPayment – existingMonthlyDebt;
if (maxMortgagePayment <= 0) {
resultDiv.innerHTML = "Your existing debt payments exceed your maximum affordable total payment based on the desired DTI. Affordability is $0.";
return;
}
// Now we need to find the loan amount (Principal) that results in maxMortgagePayment
// The formula for monthly mortgage payment is: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where:
// M = Monthly Payment (maxMortgagePayment)
// P = Principal Loan Amount (what we want to find)
// i = Monthly interest rate (interestRate / 12)
// n = Total number of payments (loanTermYears * 12)
var monthlyInterestRate = interestRate / 12;
var numberOfPayments = loanTermYears * 12;
var principal = 0;
if (monthlyInterestRate === 0) {
// Handle case for 0% interest rate (though highly unlikely for mortgages)
principal = maxMortgagePayment * numberOfPayments;
} else {
// Rearrange the formula to solve for P:
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
principal = maxMortgagePayment * (numerator / denominator);
}
// Round the principal to two decimal places for currency
principal = Math.round(principal * 100) / 100;
if (principal <= 0) {
resultDiv.innerHTML = "Could not calculate a positive loan amount with the given inputs. Please check your figures.";
return;
}
// Display the results
var totalMonthlyPITI = maxMortgagePayment; // This is the maximum PITI we calculated
var estimatedTotalLoanAmount = principal;
resultDiv.innerHTML =
"Based on your inputs:" +
"Maximum affordable PITI (Principal, Interest, Taxes, Insurance): $" + totalMonthlyPITI.toFixed(2) + "" +
"Estimated maximum loan amount (Principal): $" + estimatedTotalLoanAmount.toFixed(2) + "" +
"This estimate assumes your calculated PITI would represent " + (maxDTI * 100).toFixed(1) + "% of your gross monthly income ($" + grossMonthlyIncome.toLocaleString() + ") after accounting for your existing debts ($" + existingMonthlyDebt.toLocaleString() + ").";
}