Determining how much house you can afford is a crucial step in the home-buying process. A mortgage affordability calculator helps you estimate your potential borrowing capacity based on your income, debts, and desired loan terms. This tool is designed to give you a realistic idea of the monthly payments you might be able to manage, considering various factors.
Understanding Mortgage Affordability
Several key factors influence how much a lender will offer you for a mortgage:
Income: Lenders look at your gross monthly income (before taxes) to assess your ability to repay the loan.
Debts: Existing monthly debt payments, such as credit card bills, student loans, and car payments, reduce the amount of income available for a mortgage.
Down Payment: A larger down payment reduces the loan amount needed, potentially lowering your monthly payments and making the home more affordable.
Interest Rate: Higher interest rates mean higher monthly payments for the same loan amount.
Loan Term: The length of the mortgage (e.g., 15, 20, or 30 years) affects the monthly payment. Longer terms generally result in lower monthly payments but more interest paid over time.
Property Taxes and Homeowners Insurance: These are often included in your monthly mortgage payment (as part of PITI – Principal, Interest, Taxes, and Insurance) and must be factored into your affordability.
While this calculator provides an estimate, it's essential to consult with a mortgage lender for a pre-approval, which will give you a definitive understanding of your borrowing power.
Mortgage Affordability Calculator
function calculateMortgageAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var existingMonthlyDebts = parseFloat(document.getElementById("existingMonthlyDebts").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var estimatedTaxesInsurance = parseFloat(document.getElementById("estimatedTaxesInsurance").value);
var desiredMaxMonthlyPayment = parseFloat(document.getElementById("desiredMaxMonthlyPayment").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(grossMonthlyIncome) || grossMonthlyIncome <= 0 ||
isNaN(existingMonthlyDebts) || existingMonthlyDebts < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0 ||
isNaN(estimatedTaxesInsurance) || estimatedTaxesInsurance < 0 ||
isNaN(desiredMaxMonthlyPayment) || desiredMaxMonthlyPayment <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Debt-to-Income (DTI) Ratio Calculation – Common lending guideline is around 43%
// We'll use the desired maximum monthly payment to work backwards.
// First, subtract taxes and insurance from the desired maximum payment to find the maximum P&I payment.
var maxPrincipalInterestPayment = desiredMaxMonthlyPayment – (estimatedTaxesInsurance / 12);
if (maxPrincipalInterestPayment 0) {
maxLoanAmount = maxPrincipalInterestPayment * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else { // Handle 0% interest rate case (though unlikely for mortgages)
maxLoanAmount = maxPrincipalInterestPayment * numberOfPayments;
}
// The total affordable home price is the maximum loan amount plus the down payment.
var affordableHomePrice = maxLoanAmount + downPayment;
// Additionally, check affordability based on the income and debt.
// A common guideline is that total housing costs (PITI) should not exceed 28% of gross monthly income,
// and total debt (including mortgage) should not exceed 36-43% of gross monthly income.
// We've already incorporated the desired max monthly payment, so let's present the results clearly.
resultDiv.innerHTML = "
Estimated Affordability:
" +
"Based on your inputs, you could potentially afford a home priced around: $" + affordableHomePrice.toFixed(2) + "" +
"This estimate includes:" +
"
" +
"
A maximum loan amount of: $" + maxLoanAmount.toFixed(2) + "
" +
"
Your down payment of: $" + downPayment.toFixed(2) + "