This calculator helps you estimate your potential mortgage affordability based on your income, debts, and down payment. Remember, this is an estimate, and your actual mortgage approval will depend on a lender's detailed assessment of your financial situation.
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial first step in the home-buying process. Lenders typically use a few key ratios to assess your borrowing capacity:
Front-End Ratio (Housing Ratio): This ratio compares your potential monthly housing costs (principal, interest, taxes, insurance – PITI) to your gross monthly income. A common guideline is to keep this below 28%.
Back-End Ratio (Debt-to-Income Ratio): This ratio compares all your monthly debt obligations (including the potential PITI) to your gross monthly income. Lenders often prefer this to be below 36%, though it can go higher in some cases.
This calculator focuses on estimating the maximum loan amount you might qualify for, considering your income and existing debts, and factoring in a desired down payment. The interest rate and loan term significantly impact your monthly payments and thus your overall affordability.
Factors that influence mortgage affordability include:
Credit Score: A higher credit score generally leads to lower interest rates, increasing your affordability.
Loan-to-Value (LTV) Ratio: This is the ratio of the loan amount to the appraised value of the property. A lower LTV (meaning a larger down payment) is generally more favorable.
Loan Programs: Different loan types (e.g., FHA, VA, Conventional) have varying qualification requirements and down payment options.
Property Taxes and Homeowners Insurance: These are crucial components of your total monthly housing cost (PITI) and must be factored into your budget.
Private Mortgage Insurance (PMI): If your down payment is less than 20% on a conventional loan, you'll likely have to pay PMI, which adds to your monthly costs.
Use this calculator as a starting point. It's highly recommended to speak with a mortgage broker or lender to get a pre-approval and a precise understanding of your borrowing power.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) || annualIncome <= 0 || monthlyDebt < 0 || downPayment < 0 || interestRate <= 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var monthlyIncome = annualIncome / 12;
// A common guideline is that total debt payments (including potential mortgage)
// should not exceed 36% of gross monthly income.
// Let's assume a maximum DTI of 36% for this calculation.
var maxTotalMonthlyPayment = monthlyIncome * 0.36;
var maxMortgagePayment = maxTotalMonthlyPayment – monthlyDebt;
if (maxMortgagePayment 0) {
var numerator = Math.pow(1 + monthlyInterestRate, numberOfMonths) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfMonths);
maxLoanAmount = maxMortgagePayment * (numerator / denominator);
} else { // Handle 0% interest rate (though rare for mortgages)
maxLoanAmount = maxMortgagePayment * numberOfMonths;
}
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML = `
Estimated Maximum Loan Amount: $${maxLoanAmount.toFixed(2)}
Estimated Maximum Home Price (with your down payment): $${estimatedMaxHomePrice.toFixed(2)}
Note: This is an estimate. Actual loan approval depends on lender-specific criteria, credit score, property appraisal, and other factors. Taxes and insurance (PITI) are not included in the DTI calculation here but are essential for your overall housing cost.
`;
}
#mortgage-calculator {
font-family: sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 8px;
background-color: #f9f9f9;
}
#mortgage-calculator h2, #mortgage-calculator h3 {
text-align: center;
color: #333;
}
.form-group {
margin-bottom: 15px;
}
.form-group label {
display: block;
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.form-group input[type="number"] {
width: calc(100% – 12px);
padding: 8px;
border: 1px solid #ccc;
border-radius: 4px;
box-sizing: border-box;
}
#mortgage-calculator button {
display: block;
width: 100%;
padding: 10px;
background-color: #007bff;
color: white;
border: none;
border-radius: 5px;
font-size: 16px;
cursor: pointer;
transition: background-color 0.3s ease;
}
#mortgage-calculator button:hover {
background-color: #0056b3;
}
#result {
margin-top: 20px;
padding: 15px;
border: 1px solid #d4edda;
background-color: #d4edda;
color: #155724;
border-radius: 5px;
text-align: center;
}
#result p {
margin: 5px 0;
}
#mortgage-calculator hr {
margin-top: 30px;
border: 0;
height: 1px;
background: #ddd;
}
#mortgage-calculator h3 {
margin-top: 30px;
}
#mortgage-calculator ul {
padding-left: 20px;
text-align: left;
}
#mortgage-calculator li {
margin-bottom: 8px;
}