Determine your estimated maximum affordable monthly mortgage payment.
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Understanding Your Mortgage Affordability
This calculator helps you estimate the maximum monthly mortgage payment you can comfortably afford, taking into account your income, existing debts, and estimated homeownership costs. It's a crucial step in the home-buying process to ensure you don't overextend yourself financially.
The DTI Ratio Method
Lenders typically use the Debt-to-Income (DTI) ratio to assess your ability to manage monthly mortgage payments. A common guideline is that your total monthly debt payments, including your prospective mortgage payment, should not exceed 43% of your gross monthly income. Some lenders may allow slightly higher DTIs under specific circumstances.
Our calculator uses this principle. We first calculate your current DTI without the mortgage:
Homeowners Insurance: A fixed annual cost divided by 12.
Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home's price, lenders often require PMI. Calculated as (Annual PMI Rate / 100) * Loan Amount / 12.
The Mortgage Payment Formula (P&I)
Once we estimate the maximum monthly amount available for P&I (Principal and Interest), we use the standard mortgage payment formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (Principal & Interest)
P = The principal loan amount (this is what we are solving for indirectly based on affordability)
i = Your monthly interest rate (Annual Interest Rate / 12 / 100)
n = The total number of payments over the loan's lifetime (Loan Term in Years * 12)
The calculator works backward: it determines the maximum P&I payment you can afford based on your DTI, and then estimates the maximum loan amount you could support with that P&I payment.
How to Use This Calculator:
Enter your gross monthly income before taxes.
Add up all your other monthly debt obligations (credit cards, car loans, student loans, etc.).
Input your planned down payment amount.
Estimate the annual interest rate you expect to receive.
Select the loan term (e.g., 30 years).
Estimate your annual property taxes and homeowners insurance costs.
If your down payment is less than 20%, estimate the annual PMI rate.
Click "Calculate My Affordability" to see your estimated maximum affordable monthly mortgage payment (including PITI – Principal, Interest, Taxes, and Insurance).
Disclaimer: This calculator provides an estimate for informational purposes only. It does not constitute financial advice. Your actual borrowing power will be determined by a mortgage lender after a full review of your credit, income, assets, and liabilities. Rates and terms can vary significantly.
function calculateAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var existingDebts = parseFloat(document.getElementById("existingDebts").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTerm").value);
var annualPropertyTaxRate = parseFloat(document.getElementById("propertyTaxRate").value);
var annualHomeInsurance = parseFloat(document.getElementById("homeInsuranceRate").value);
var annualPmiRate = parseFloat(document.getElementById("pmiRate").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
// Input validation
if (isNaN(monthlyIncome) || monthlyIncome <= 0 ||
isNaN(existingDebts) || existingDebts < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(annualInterestRate) || annualInterestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0 ||
isNaN(annualPropertyTaxRate) || annualPropertyTaxRate < 0 ||
isNaN(annualHomeInsurance) || annualHomeInsurance < 0 ||
isNaN(annualPmiRate) || annualPmiRate < 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Define typical DTI limit
var maxDTI = 0.43; // 43%
// Calculate maximum allowed total monthly debt payment
var maxTotalDebtPayment = monthlyIncome * maxDTI;
// Calculate available income for mortgage (PITI)
var availableForMortgage = maxTotalDebtPayment – existingDebts;
if (availableForMortgage <= 0) {
resultDiv.innerHTML = "Based on your income and existing debts, you may not be able to afford a mortgage payment at this time.";
return;
}
// Estimate the maximum loan amount we can support with the available PITI
// This is an iterative or solver problem. A simplified approach is to estimate the max P&I first
// and then calculate the max loan amount. However, a direct approach is better if possible.
// Let's assume the goal is to find the maximum *total monthly housing cost* (PITI).
// The calculator aims to show the affordability of a *payment*, not necessarily the max home price directly.
// We will display the max affordable PITI and then *estimate* a max loan amount this supports.
// For simplicity, let's calculate the max P&I payment first.
// We need to back-calculate P from M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// P = M * [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
var maxLoanAmount = 0;
var estimatedMaxPI = 0;
// We need to find the maximum P (loan amount) such that P + Taxes + Insurance + PMI 0) {
monthlyPiFactor = (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle 0% interest rate scenario (though unlikely for mortgages)
monthlyPiFactor = 1 / numberOfPayments;
}
var monthlyPropTaxEstimateFactor = annualPropertyTaxRate / 100 / 12;
var monthlyPmiEstimateFactor = annualPmiRate / 100 / 12;
var monthlyHomeInsurance = annualHomeInsurance / 12;
var denominator = monthlyPiFactor + monthlyPropTaxEstimateFactor + monthlyPmiEstimateFactor;
var numerator = availableForMortgage – monthlyHomeInsurance;
if (denominator <= 0 || numerator availableForMortgage) {
var diff = totalCalculatedPITI – availableForMortgage;
// Adjust P&I first as it's the largest component typically
maxPrincipalAndInterest = Math.max(0, maxPrincipalAndInterest – diff);
totalCalculatedPITI = maxPrincipalAndInterest + estimatedMonthlyTaxes + monthlyHomeInsurance + estimatedMonthlyPMI;
}
// Display results
resultDiv.innerHTML = `
Estimated Maximum Affordable PITI: $${availableForMortgage.toFixed(2)}
(Principal, Interest, Taxes, Insurance)
Estimated Maximum Loan Amount: $${maxLoanAmount.toFixed(2)}
Estimated Maximum Principal & Interest Payment: $${maxPrincipalAndInterest.toFixed(2)}
`;
}