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Mortgage Affordability Calculator

Understanding Your Mortgage Affordability

Buying a home is one of the biggest financial decisions you'll make. Understanding how much you can realistically afford for a mortgage is a crucial first step. This Mortgage Affordability Calculator is designed to give you an estimate based on your income, existing debts, and anticipated mortgage terms.

Key Factors in Mortgage Affordability:

  • Annual Household Income: This is the gross income from all borrowers combined before taxes and deductions. Lenders will look at this to determine your repayment capacity.
  • Monthly Debt Payments: This includes all your recurring monthly debt obligations such as credit card payments, car loans, student loans, and any other personal loans. Lenders use this to calculate your Debt-to-Income (DTI) ratio.
  • Down Payment: The upfront amount you pay towards the home purchase. A larger down payment reduces the loan amount needed and can lead to better interest rates and lower monthly payments.
  • Interest Rate: The annual interest rate on the mortgage loan. 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: The duration over which you'll repay the mortgage, typically 15 or 30 years. A shorter term means higher monthly payments but less total interest paid.

How the Calculator Works:

This calculator uses a common lending guideline of the 28/36 rule as a starting point, though lenders may have their own specific criteria. The 28/36 rule suggests that your total housing expenses (including principal, interest, taxes, and insurance – PITI) should not exceed 28% of your gross monthly income, and your total debt obligations (including housing costs) should not exceed 36% of your gross monthly income.

The calculator first estimates the maximum monthly mortgage payment you can afford based on the 28% rule (after subtracting existing debts). It then uses a standard mortgage payment formula (amortization formula) to determine the maximum loan amount you could qualify for with that monthly payment, given your specified interest rate and loan term. Finally, it adds your down payment to this maximum loan amount to estimate the maximum home price you might be able to afford.

Important Note: This calculator provides an *estimate* only. Actual mortgage approval depends on many factors, including your credit score, lender-specific policies, employment history, and current market conditions. It is always recommended to speak with a mortgage professional for a personalized assessment.

Example Calculation:

Let's say you have an Annual Household Income of $100,000. Your total Monthly Debt Payments are $600. You plan to make a Down Payment of $50,000. You're looking at a mortgage with an Estimated Annual Interest Rate of 6.5% over a Loan Term of 30 years.

Gross Monthly Income = $100,000 / 12 = $8,333.33
Maximum Housing Payment (28% rule) = $8,333.33 * 0.28 = $2,333.33
Maximum Total Debt Payment (36% rule) = $8,333.33 * 0.36 = $3,000.00
Allowed Monthly Mortgage Payment = $3,000.00 (Max Total Debt) – $600 (Current Debts) = $2,400.00
The calculator will then determine the maximum loan amount you can afford with a payment of approximately $2,333.33 to $2,400.00 (whichever is lower, usually based on the more restrictive rule), and add your $50,000 down payment to estimate your affordable home price.

var calculateMortgageAffordability = function() { var annualIncome = parseFloat(document.getElementById("annualIncome").value); var currentDebts = parseFloat(document.getElementById("currentDebts").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"); resultDiv.innerHTML = ""; // Clear previous results // Input validation if (isNaN(annualIncome) || annualIncome <= 0 || isNaN(currentDebts) || currentDebts < 0 || isNaN(downPayment) || downPayment < 0 || isNaN(interestRate) || interestRate <= 0 || isNaN(loanTermYears) || loanTermYears <= 0) { resultDiv.innerHTML = "Please enter valid positive numbers for all fields."; return; } var monthlyIncome = annualIncome / 12; // — Applying the 28/36 Rule — // Rule 1: Housing expenses (PITI) should not exceed 28% of gross monthly income var maxHousingPaymentFrom28Rule = monthlyIncome * 0.28; // Rule 2: Total debt obligations (housing + other debts) should not exceed 36% of gross monthly income var maxTotalDebtPaymentFrom36Rule = monthlyIncome * 0.36; var maxHousingPaymentFrom36Rule = maxTotalDebtPaymentFrom36Rule – currentDebts; // The more conservative (lower) of the two limits should be used for maximum housing payment var maxMonthlyMortgagePayment = Math.min(maxHousingPaymentFrom28Rule, maxHousingPaymentFrom36Rule); if (maxMonthlyMortgagePayment 0 && numberOfPayments > 0) { var powerTerm = Math.pow(1 + monthlyInterestRate, numberOfPayments); var numerator = monthlyInterestRate * powerTerm; var denominator = powerTerm – 1; if (denominator > 0) { maxLoanAmount = maxMonthlyMortgagePayment * (denominator / numerator); } else { // Handle cases where monthlyInterestRate is extremely small or zero, though validation should prevent 0. // If i is 0, M = P/n, so P = M*n. if (monthlyInterestRate === 0) { maxLoanAmount = maxMonthlyMortgagePayment * numberOfPayments; } else { resultDiv.innerHTML = "Error calculating loan amount due to rate or term."; return; } } } else if (monthlyInterestRate === 0) { // Handle 0% interest rate edge case maxLoanAmount = maxMonthlyMortgagePayment * numberOfPayments; } // — Estimating Max Affordable Home Price — var maxAffordableHomePrice = maxLoanAmount + downPayment; // — Displaying Results — var outputHTML = "

Your Estimated Mortgage Affordability

"; outputHTML += "Based on the 28/36 rule and your inputs:"; outputHTML += "
    "; outputHTML += "
  • Gross Monthly Income: $" + monthlyIncome.toFixed(2) + "
    • "; outputHTML += "
  • Maximum Monthly Housing Payment Allowed (28% rule): $" + maxHousingPaymentFrom28Rule.toFixed(2) + "
    • "; outputHTML += "
  • Maximum Total Debt Payment Allowed (36% rule): $" + maxTotalDebtPaymentFrom36Rule.toFixed(2) + "
    • "; outputHTML += "
  • Maximum Monthly Mortgage Payment (considering debts): $" + maxMonthlyMortgagePayment.toFixed(2) + "
    • "; outputHTML += "
  • Estimated Maximum Loan Amount: $" + maxLoanAmount.toFixed(2) + "
    • "; outputHTML += "
  • Estimated Maximum Affordable Home Price (incl. Down Payment): $" + maxAffordableHomePrice.toFixed(2) + "
    • "; outputHTML += "
"; outputHTML += "Note: This is an estimate. Actual affordability may vary based on lender policies, credit score, and other factors. Taxes and insurance (PITI) are not included in the calculation of max loan amount derived from monthly payment, but are implicitly limited by the 28% rule."; resultDiv.innerHTML = outputHTML; }; .calculator-container { font-family: sans-serif; border: 1px solid #ccc; padding: 20px; border-radius: 8px; max-width: 600px; margin: 20px auto; background-color: #f9f9f9; } .calculator-inputs { display: grid; grid-template-columns: repeat(auto-fit, minmax(250px, 1fr)); gap: 15px; margin-bottom: 20px; } .input-group { display: flex; flex-direction: column; } .input-group label { margin-bottom: 5px; font-weight: bold; font-size: 0.9em; } .input-group input { padding: 10px; border: 1px solid #ccc; border-radius: 4px; font-size: 1em; } .calculator-container button { background-color: #007bff; color: white; padding: 12px 20px; border: none; border-radius: 4px; cursor: pointer; font-size: 1.1em; width: 100%; margin-top: 10px; } .calculator-container button:hover { background-color: #0056b3; } .calculator-result { margin-top: 25px; padding: 15px; border: 1px dashed #ddd; background-color: #fff; border-radius: 4px; } .calculator-result h3 { margin-top: 0; color: #333; } .calculator-result ul { list-style: disc; padding-left: 20px; } .calculator-result li { margin-bottom: 8px; } .calculator-result strong { color: #0056b3; } article { font-family: sans-serif; line-height: 1.6; margin: 20px auto; max-width: 800px; padding: 0 15px; } article h3, article h4 { color: #333; } article ul { margin-left: 20px; }

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