Determine how much house you might be able to afford based on your annual income and estimated monthly debt obligations.
15 Years
20 Years
25 Years
30 Years
Understanding Your Mortgage Affordability
Buying a home is one of the biggest financial decisions you'll make. A mortgage is a significant commitment, and it's crucial to understand how much you can realistically afford before you start house hunting. This Salary Mortgage Affordability Calculator helps you estimate your potential borrowing power by considering your income, existing debts, down payment, and the current interest rate environment.
How the Calculator Works (The Math Behind It)
Lenders typically use debt-to-income ratios (DTI) to assess your ability to manage mortgage payments. The most common guidelines are:
Front-end DTI (Housing Ratio): Your proposed total monthly housing payment (principal, interest, taxes, insurance – PITI) should ideally be no more than 28% of your gross monthly income.
Back-end DTI (Total Debt Ratio): Your total monthly debt obligations (including PITI) should ideally not exceed 36% of your gross monthly income.
This calculator simplifies the process by focusing on the back-end DTI, as it's a more conservative and widely used metric for determining affordability.
The calculator performs the following steps:
Calculate Gross Monthly Income: Annual Gross Income / 12.
Determine Maximum Allowable Monthly Debt: Gross Monthly Income * Maximum DTI Ratio (we use 36% as a common conservative guideline).
Calculate Available Monthly Payment for Mortgage: Maximum Allowable Monthly Debt – Total Monthly Debt Payments. This is the amount you can afford for principal, interest, taxes, and insurance (PITI).
Estimate Maximum Loan Amount: Using the available monthly payment, the loan term, and the interest rate, we calculate the maximum loan principal you could support. This is done using the standard mortgage payment formula, rearranged to solve for the principal (P):
P = M / [ i(1 + i)^n - (1 + i)^n ]
Where:
P = Principal loan amount
M = Monthly payment (Available Monthly Payment for Mortgage – estimated taxes and insurance). For simplicity in this calculator, we are allocating the full available amount to P&I, meaning the PITI might be higher than the calculated "max loan amount" implies if taxes/insurance are significant. A more detailed calculator would include these.
n = Total number of payments (Loan Term in Years * 12)
Note: This calculation provides an estimate for the loan principal. The total house price you can afford is this loan amount plus your down payment.
Important Considerations:
Taxes and Insurance (PITI): This calculator focuses on the principal and interest (P&I) based on your income and debt. Remember that your actual monthly housing payment will include Property Taxes and Homeowner's Insurance (and potentially Private Mortgage Insurance – PMI). These will increase your total monthly housing cost and reduce the amount available for P&I, thus lowering your maximum loan amount. Always factor these in!
Lender Guidelines Vary: Different lenders have different DTI requirements. Some may go higher (up to 43% or even 50% in certain programs), while others are stricter. This calculator provides a general guideline.
Closing Costs: Don't forget closing costs, which can add several thousand dollars to your upfront expenses.
Interest Rate Fluctuations: Mortgage rates change daily. The rate you use here is an estimate.
Credit Score: Your credit score significantly impacts the interest rate you'll qualify for and, therefore, your affordability.
Down Payment Impact: A larger down payment reduces the loan amount needed, potentially allowing you to buy a more expensive home or have lower monthly payments.
This calculator is a tool to help you estimate your potential mortgage affordability. It's always recommended to speak with a mortgage professional or lender for a personalized assessment.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
resultDiv.classList.remove('show');
var maxDtiRatio = 0.36; // Using 36% as a common conservative back-end DTI
var propertyTaxRate = 0.01; // Estimated annual property tax rate (1%)
var homeInsuranceRate = 0.005; // Estimated annual homeowner's insurance rate (0.5%)
var pmiRate = 0.005; // Estimated annual PMI rate (0.5%) – only if loan-to-value > 80%
// Input validation
if (isNaN(annualIncome) || annualIncome <= 0) {
resultDiv.innerHTML = "Please enter a valid annual income.";
resultDiv.classList.add('show');
return;
}
if (isNaN(monthlyDebt) || monthlyDebt < 0) {
resultDiv.innerHTML = "Please enter a valid monthly debt amount.";
resultDiv.classList.add('show');
return;
}
if (isNaN(downPayment) || downPayment < 0) {
resultDiv.innerHTML = "Please enter a valid down payment amount.";
resultDiv.classList.add('show');
return;
}
if (isNaN(annualInterestRate) || annualInterestRate 20) {
resultDiv.innerHTML = "Please enter a valid interest rate (e.g., 5.5).";
resultDiv.classList.add('show');
return;
}
if (isNaN(loanTerm) || loanTerm <= 0) {
resultDiv.innerHTML = "Please select a valid loan term.";
resultDiv.classList.add('show');
return;
}
var grossMonthlyIncome = annualIncome / 12;
var maxAllowableMonthlyDebt = grossMonthlyIncome * maxDtiRatio;
var availableForPITI = maxAllowableMonthlyDebt – monthlyDebt;
if (availableForPITI 0.80) {
monthlyPMI = estimatedHomePrice * pmiRate / 12;
}
var budgetForPI = availableForPITI – monthlyTaxes – monthlyInsurance – monthlyPMI;
if (budgetForPI 0) {
maxLoanAmount = budgetForPI * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else { // Handle 0% interest rate case, though unlikely for mortgages
maxLoanAmount = budgetForPI * numberOfPayments;
}
var maxHomePriceAffordability = maxLoanAmount + downPayment;
// Refine estimates if needed (simple refinement: re-calculate PMI based on new loan amount)
var refinedLoanAmount = maxHomePriceAffordability – downPayment;
var refinedMonthlyPMI = 0;
if (refinedLoanAmount > 0 && refinedLoanAmount / maxHomePriceAffordability > 0.80) {
refinedMonthlyPMI = maxHomePriceAffordability * pmiRate / 12;
}
// Check if refined PMI significantly changes the budget
if (Math.abs(refinedMonthlyPMI – monthlyPMI) > 10) { // Arbitrary threshold for significant change
budgetForPI = availableForPITI – monthlyTaxes – monthlyInsurance – refinedMonthlyPMI;
if (budgetForPI > 0) {
if (monthlyInterestRate > 0) {
maxLoanAmount = budgetForPI * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
maxLoanAmount = budgetForPI * numberOfPayments;
}
maxHomePriceAffordability = maxLoanAmount + downPayment;
} else {
resultDiv.innerHTML = "Your estimated taxes, insurance, and PMI would consume your entire available housing budget. You may need a larger down payment or a lower purchase price.";
resultDiv.classList.add('show');
return;
}
}
var formattedMaxHomePrice = maxHomePriceAffordability.toLocaleString(undefined, { maximumFractionDigits: 0 });
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { maximumFractionDigits: 0 });
var formattedMonthlyPI = budgetForPI.toLocaleString(undefined, { maximumFractionDigits: 2 });
var formattedMonthlyPITI = availableForPITI.toLocaleString(undefined, { maximumFractionDigits: 2 });
var formattedMaxAllowableDebt = maxAllowableMonthlyDebt.toLocaleString(undefined, { maximumFractionDigits: 2 });
var formattedGrossMonthlyIncome = grossMonthlyIncome.toLocaleString(undefined, { maximumFractionDigits: 2 });
resultDiv.innerHTML = `
Estimated Affordability:
Maximum Estimated Home Price: $${formattedMaxHomePrice}(Based on your inputs and estimated taxes/insurance/PMI)
Estimated Maximum Loan Amount: $${formattedMaxLoanAmount}
Estimated Monthly Payment (Principal & Interest): $${formattedMonthlyPI}
Estimated Total Monthly Housing Payment (PITI): $${formattedMonthlyPITI}
Breakdown:
Gross Monthly Income: $${formattedGrossMonthlyIncome}
Maximum Allowable Monthly Debt (36% DTI): $${formattedMaxAllowableDebt}
Your Total Monthly Debt Payments: $${monthlyDebt.toLocaleString(undefined, { maximumFractionDigits: 2 })}
Remaining for PITI: $${availableForPITI.toLocaleString(undefined, { maximumFractionDigits: 2 })}
`;
resultDiv.classList.add('show');
}