Determining how much house you can afford is a crucial step in the home-buying process. A mortgage affordability calculator helps you estimate the maximum loan amount and, consequently, the maximum home price you can realistically manage based on your financial situation.
Key Factors Influencing Affordability:
Monthly Gross Income: This is your total income before taxes and deductions. Lenders use this as a primary indicator of your ability to repay a loan.
Existing Debt Payments: This includes all your current monthly financial obligations, such as credit card payments, auto loans, student loans, and personal loans. Lenders consider these when assessing your debt-to-income ratio.
Down Payment: The amount of money you pay upfront towards the purchase price. A larger down payment reduces the loan amount needed and can improve your chances of loan approval and secure better interest rates.
Loan Term: The duration of the mortgage, typically 15 or 30 years. Longer terms result in lower monthly payments but more interest paid over time.
Interest Rate: The percentage charged by the lender on the borrowed amount. Even small differences in interest rates can significantly impact your monthly payments and the total cost of the loan.
Property Taxes: Annual taxes levied by local governments on your property. These are typically paid monthly as part of your mortgage payment (escrow).
Homeowners Insurance: Insurance that protects your home against damage or loss. This is also usually paid monthly via escrow.
PMI (Private Mortgage Insurance): If your down payment is less than 20% of the home's price, lenders typically require PMI. This protects the lender in case you default on the loan.
How the Calculator Works:
This calculator uses common lending guidelines to estimate your maximum affordable mortgage. It typically considers:
Front-End Ratio (Housing Ratio): The percentage of your gross monthly income that goes towards housing expenses (principal, interest, property taxes, insurance, and PMI). A common guideline is a ratio of 28% or lower.
Back-End Ratio (Debt-to-Income Ratio): The percentage of your gross monthly income that goes towards all monthly debt payments, including housing and existing debts. A common guideline is a ratio of 36% or lower, though this can vary.
The calculator will estimate the maximum monthly payment you can afford based on these ratios and then work backward to determine the loan amount, factoring in your down payment to suggest a maximum home price.
Disclaimer:
This calculator provides an estimate for informational purposes only and should not be considered a loan approval or a guarantee of financing. Actual loan amounts and interest rates will depend on lender-specific underwriting criteria, your credit score, market conditions, and other factors.
function calculateMortgageAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var existingDebt = parseFloat(document.getElementById("existingDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var propertyTaxes = parseFloat(document.getElementById("propertyTaxes").value);
var homeInsurance = parseFloat(document.getElementById("homeInsurance").value);
var pmi = parseFloat(document.getElementById("pmi").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(monthlyIncome) || monthlyIncome <= 0 ||
isNaN(existingDebt) || existingDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(interestRate) || interestRate < 0 ||
isNaN(propertyTaxes) || propertyTaxes < 0 ||
isNaN(homeInsurance) || homeInsurance < 0 ||
isNaN(pmi) || pmi < 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// — Affordability Calculation —
// Use common DTI ratios as guidelines
var maxHousingRatio = 0.28; // Example: 28% of gross income for housing
var maxTotalDebtRatio = 0.36; // Example: 36% of gross income for total debt
var maxMonthlyHousingPayment = monthlyIncome * maxHousingRatio;
var maxTotalMonthlyDebt = monthlyIncome * maxTotalDebtRatio;
var maxOtherMonthlyDebtsAllowed = maxTotalMonthlyDebt – existingDebt;
// The lower of the two limits determines the maximum affordable monthly PITI+PMI payment
var maxPitimpiPayment = Math.min(maxMonthlyHousingPayment, maxOtherMonthlyDebtsAllowed);
// Convert annual costs to monthly costs
var monthlyPropertyTaxes = propertyTaxes / 12;
var monthlyHomeInsurance = homeInsurance / 12;
var monthlyPmi = pmi / 12;
// Calculate the maximum Principal and Interest (P&I) payment affordable
var maxPiPayment = maxPitimpiPayment – monthlyPropertyTaxes – monthlyHomeInsurance – monthlyPmi;
if (maxPiPayment 0) {
maxLoanAmount = maxPiPayment * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
// Handle zero interest rate case (though unlikely for mortgages)
maxLoanAmount = maxPiPayment * numberOfPayments;
}
// Calculate maximum affordable home price
var maxHomePrice = maxLoanAmount + downPayment;
// — Display Results —
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxHomePrice = maxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyPitimpi = maxPitimpiPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = `
Estimated Affordability:
Maximum Estimated Loan Amount: ${formattedMaxLoanAmount}
Maximum Estimated Home Price (including down payment): ${formattedMaxHomePrice}
Estimated Maximum Monthly Housing Payment (PITI + PMI): ${formattedMonthlyPitimpi}
These figures are estimates based on common lending guidelines. Your actual affordability may vary.