Understanding how much mortgage you can afford is a crucial step in the home-buying process. This calculator helps you estimate your potential borrowing power based on your income, debts, and down payment.
How Mortgage Affordability Works
Lenders typically consider several factors when determining how much they are willing to lend you for a mortgage. The most common metrics are the Debt-to-Income (DTI) ratio and your available down payment.
Debt-to-Income Ratio (DTI): This is a comparison of your monthly debt payments to your gross monthly income. Lenders often look for a DTI ratio below 43% for conventional loans, though this can vary. There are two main DTI calculations:
Front-end ratio (or housing ratio): This measures how much of your gross monthly income goes towards housing expenses (principal, interest, property taxes, and homeowner's insurance – often called PITI). A common guideline is to keep this below 28%.
Back-end ratio (or total debt ratio): This measures how much of your gross monthly income goes towards all your monthly debt obligations, including housing, credit cards, auto loans, student loans, and other recurring debts. A common guideline is to keep this below 36% to 43%.
Down Payment: The larger your down payment, the less you need to borrow, which directly impacts your affordability and can also help you avoid Private Mortgage Insurance (PMI).
This calculator focuses on a simplified back-end DTI calculation to give you a general idea of affordability. Remember, this is an estimate, and your actual borrowing capacity will be determined by a mortgage lender after a full review of your financial situation.
Mortgage Affordability Calculator
function calculateAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var existingMonthlyDebt = parseFloat(document.getElementById("existingMonthlyDebt").value);
var targetDTI = parseFloat(document.getElementById("targetDTI").value);
var estimatedAnnualTaxesAndInsurance = parseFloat(document.getElementById("estimatedAnnualTaxesAndInsurance").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(grossMonthlyIncome) || isNaN(existingMonthlyDebt) || isNaN(targetDTI) || isNaN(estimatedAnnualTaxesAndInsurance) || isNaN(downPayment)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (targetDTI 100) {
resultDiv.innerHTML = "Target DTI must be between 1 and 100.";
return;
}
var maxAllowedTotalDebt = grossMonthlyIncome * (targetDTI / 100);
var maxAllowedPITI = maxAllowedTotalDebt – existingMonthlyDebt;
if (maxAllowedPITI < 0) {
resultDiv.innerHTML = "Based on your existing debts and target DTI, you may not qualify for additional housing payments.";
return;
}
var monthlyTaxesAndInsurance = estimatedAnnualTaxesAndInsurance / 12;
var maxAllowedPrincipalAndInterest = maxAllowedPITI – monthlyTaxesAndInsurance;
if (maxAllowedPrincipalAndInterest < 0) {
resultDiv.innerHTML = "With your existing debts and estimated taxes/insurance, your maximum allowed housing payment is insufficient for principal and interest. You may need to increase income, reduce other debts, or lower housing cost expectations.";
return;
}
// This is a very simplified estimation. Actual loan amount depends on interest rate, loan term, and lender policies.
// We can't precisely calculate the loan amount without an interest rate and term, but we can show the maximum P&I payment.
var affordabilityOutput = "
Estimated Affordability
";
affordabilityOutput += "Maximum Allowed Total Monthly Debt Payments: $" + maxAllowedTotalDebt.toFixed(2) + "";
affordabilityOutput += "Maximum Allowed Monthly PITI (Principal, Interest, Taxes, Insurance): $" + maxAllowedPITI.toFixed(2) + "";
affordabilityOutput += "Maximum Allowed Monthly Principal & Interest Payment: $" + maxAllowedPrincipalAndInterest.toFixed(2) + "";
affordabilityOutput += "Note: This calculation provides an estimate. The actual loan amount you can borrow will depend on the mortgage interest rate, loan term, lender policies, credit score, and other financial factors. Your down payment is not directly used in the DTI calculation but reduces the loan amount needed.";
resultDiv.innerHTML = affordabilityOutput;
}