Mortgage Affordability Calculator
Use this calculator to estimate how much you can afford to borrow for a mortgage. This tool considers your income, existing debts, and desired down payment to give you an idea of your potential borrowing power. Remember, this is an estimate, and your actual mortgage approval will depend on lender-specific criteria and a full financial assessment.
.calculator-container {
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input[type="number"] {
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button {
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function calculateMortgageAffordability() {
var grossAnnualIncome = parseFloat(document.getElementById("grossAnnualIncome").value);
var existingMonthlyDebt = parseFloat(document.getElementById("existingMonthlyDebt").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(grossAnnualIncome) || grossAnnualIncome <= 0) {
resultDiv.innerHTML = "
Error: Please enter a valid Gross Annual Income.";
return;
}
if (isNaN(existingMonthlyDebt) || existingMonthlyDebt < 0) {
resultDiv.innerHTML = "
Error: Please enter a valid number for Existing Monthly Debt Payments.";
return;
}
if (isNaN(downPayment) || downPayment < 0) {
resultDiv.innerHTML = "
Error: Please enter a valid Down Payment Amount.";
return;
}
if (isNaN(interestRate) || interestRate 100) {
resultDiv.innerHTML = "
Error: Please enter a valid Annual Interest Rate between 1% and 100%.";
return;
}
if (isNaN(loanTermYears) || loanTermYears <= 0) {
resultDiv.innerHTML = "
Error: Please enter a valid Loan Term in Years.";
return;
}
// — Affordability Calculation Logic —
// A common guideline is that your total housing costs (including mortgage principal & interest,
// property taxes, homeowner's insurance, and HOA dues – PITI) should not exceed 28% of your
// gross monthly income, and your total debt obligations (PITI + existing debt) should not
// exceed 36% of your gross monthly income. Lenders use different ratios, and this is a simplified model.
var grossMonthlyIncome = grossAnnualIncome / 12;
var maxTotalDebtPayment = grossMonthlyIncome * 0.36; // 36% debt-to-income ratio
var maxHousingPayment = grossMonthlyIncome * 0.28; // 28% housing-to-income ratio
// Estimated monthly taxes and insurance (PITI – Principal, Interest, Taxes, Insurance)
// This is a simplification. Actual taxes and insurance vary significantly by location and property.
// We'll estimate property taxes at 1.2% of home value annually and insurance at $1200 annually.
// We'll assume the maximum affordable home price to work backwards.
var maxMonthlyHousingPaymentAvailable = maxHousingPayment – (existingMonthlyDebt * (maxHousingPayment / maxTotalDebtPayment));
if (maxMonthlyHousingPaymentAvailable 0 && loanTermMonths > 0) {
maxLoanAmount = maxMonthlyHousingPaymentAvailable * (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths));
} else if (monthlyInterestRate === 0 && loanTermMonths > 0) {
maxLoanAmount = maxMonthlyHousingPaymentAvailable * loanTermMonths;
}
// Estimate property taxes and insurance based on the potential home price (loan amount + down payment)
// This requires an iterative approach or estimation. For simplicity, let's estimate based on max loan.
// Let's assume for estimation purposes that taxes and insurance are about 1.5% of the total home value annually,
// which translates to 0.125% monthly. This is a very rough estimate.
var estimatedMonthlyTaxesAndInsurance = (maxLoanAmount + downPayment) * (1.5 / 100) / 12;
if (estimatedMonthlyTaxesAndInsurance < 0) estimatedMonthlyTaxesAndInsurance = 0;
// Now, re-calculate max loan amount considering taxes and insurance.
// Max P&I payment = maxHousingPayment – estimatedMonthlyTaxesAndInsurance
var maxPrincipalAndInterestPayment = maxHousingPayment – estimatedMonthlyTaxesAndInsurance;
if (maxPrincipalAndInterestPayment 0 && loanTermMonths > 0) {
maxLoanAmount = maxPrincipalAndInterestPayment * (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths));
} else if (monthlyInterestRate === 0 && loanTermMonths > 0) {
maxLoanAmount = maxPrincipalAndInterestPayment * loanTermMonths;
}
// Ensure loan amount is not negative
if (maxLoanAmount < 0) {
maxLoanAmount = 0;
}
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML = "Estimated Maximum Loan Amount:
$" + estimatedMaxHomePrice.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "" +
"Estimated Maximum Purchase Price (incl. down payment):
$" + estimatedMaxHomePrice.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "" +
"Estimated Maximum Monthly P&I Payment:
$" + maxPrincipalAndInterestPayment.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "" +
"Estimated Monthly Taxes & Insurance:
$" + estimatedMonthlyTaxesAndInsurance.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "";
}
Understanding Mortgage Affordability
Determining how much mortgage you can afford is a crucial step in the home-buying process. It's not just about what a lender will approve; it's about what you can comfortably manage each month without financial strain. This calculator provides an estimate based on common lending guidelines, but it's essential to understand the factors involved.
Key Factors in Affordability Calculations:
- Gross Annual Income: This is your income before taxes and other deductions. Lenders look at this to gauge your ability to repay a loan.
- Existing Monthly Debt Payments: This includes minimum payments on credit cards, auto loans, student loans, personal loans, and any other recurring debt. These obligations reduce the amount of income available for a mortgage.
- Down Payment: The upfront cash you pay towards the home's purchase price. A larger down payment reduces the loan amount needed, which can increase affordability and potentially secure better interest rates.
- Interest Rate: The annual percentage rate charged on the loan. Even a small difference in interest rate can significantly impact your monthly payments and the total cost of the loan over time.
- Loan Term (Years): The length of time you have to repay the loan, typically 15, 20, or 30 years. Longer terms result in lower monthly payments but higher overall interest paid.
- Debt-to-Income Ratio (DTI): Lenders often use DTI to assess risk. It's calculated by dividing your total monthly debt payments by your gross monthly income. Common DTI limits are around 36% for total debt and 28% for housing costs (including mortgage principal, interest, property taxes, and homeowners insurance – PITI). Our calculator uses these as benchmarks.
- Property Taxes and Homeowners Insurance: These are essential components of your monthly housing payment (PITI). They vary significantly based on location and property value. Our calculator includes an estimation for these costs.
How the Calculator Works:
The calculator first estimates your maximum monthly housing payment based on a percentage of your gross monthly income (typically 28%). It then subtracts your existing monthly debt payments to determine the maximum amount available for your mortgage principal and interest (P&I). It also factors in estimated monthly costs for property taxes and homeowners insurance. Using the target P&I payment, interest rate, and loan term, it calculates the maximum loan amount you could qualify for. The estimated maximum purchase price is then the sum of this loan amount and your down payment.
Example:
Let's say you have a Gross Annual Income of $80,000, Existing Monthly Debt Payments totaling $400, a Down Payment of $30,000, an estimated Annual Interest Rate of 6.5%, and you are looking at a Loan Term of 30 years.
- Gross Monthly Income: $80,000 / 12 = $6,666.67
- Maximum Housing Payment (28% DTI): $6,666.67 * 0.28 = $1,866.67
- Maximum Total Debt Payment (36% DTI): $6,666.67 * 0.36 = $2,400.00
- Estimated Monthly Taxes & Insurance (approx. 1.5% annually of estimated price): This will be estimated iteratively. Let's assume for this example it is $400.
- Maximum P&I Payment Available: $1,866.67 (Max Housing) – $400 (Taxes/Ins) = $1,466.67
- Using a mortgage formula for $1,466.67 P&I, 6.5% interest, 30 years, the maximum loan amount is approximately $232,000.
- Estimated Maximum Purchase Price: $232,000 (Loan) + $30,000 (Down Payment) = $262,000
Based on these figures, you might be able to afford a home around $262,000, with a mortgage of approximately $232,000.
Disclaimer: This calculator provides an estimate for informational purposes only. It does not constitute financial advice. Actual loan approval amounts and terms depend on lender-specific underwriting criteria, credit score, market conditions, and a complete financial review. Consult with a mortgage professional for personalized guidance.