Determining how much house you can afford is a crucial step in the home-buying process. While lenders consider various factors, a common guideline is the "front-end" and "back-end" debt-to-income (DTI) ratios.
Front-End DTI (Housing Ratio): This ratio typically suggests that your total monthly housing expenses (principal, interest, taxes, insurance – PITI) should not exceed 28% of your gross monthly income.
Back-End DTI (Total Debt Ratio): This ratio considers all your monthly debt obligations, including your potential mortgage payment, car loans, student loans, and credit card minimum payments. Lenders generally prefer this ratio to be no more than 36% of your gross monthly income, though some may go up to 43% or higher depending on your creditworthiness.
This calculator primarily focuses on estimating your maximum affordable loan amount based on a common back-end DTI guideline (often around 36% of gross income minus existing debts). It also estimates the maximum monthly principal and interest (P&I) payment you could afford.
How it works:
Gross Monthly Income: Your total annual income is divided by 12 to get your gross monthly income.
Maximum Allowable Debt: We estimate the maximum total monthly debt you can handle based on a typical DTI limit (e.g., 36% of gross monthly income).
Maximum Monthly Mortgage Payment: Your existing monthly debt payments are subtracted from the maximum allowable debt to determine how much is left for your mortgage payment (principal and interest).
Maximum Loan Amount: Using the estimated maximum monthly P&I payment, interest rate, and loan term, we calculate the maximum loan amount you could qualify for.
Estimated Maximum Home Price: This is calculated by adding your down payment to the maximum loan amount you can afford.
Important Considerations:
PITI: This calculator estimates Principal & Interest. You must also factor in property taxes, homeowner's insurance, and potentially Private Mortgage Insurance (PMI) or Homeowners Association (HOA) fees, which will increase your actual monthly housing cost.
Lender Specifics: Lenders have their own specific DTI requirements and underwriting criteria. This is a general estimate.
Credit Score: Your credit score significantly impacts the interest rate you'll be offered, which in turn affects affordability.
Market Conditions: Local housing market conditions, including property taxes and insurance costs, vary widely.
Use this calculator as a starting point to understand your potential borrowing power. Always consult with a mortgage lender for a personalized pre-approval.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var existingDebts = parseFloat(document.getElementById("existingDebts").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyPI = document.getElementById("monthlyPI");
var maxLoanAmount = document.getElementById("maxLoanAmount");
var maxHomePrice = document.getElementById("maxHomePrice");
// Clear previous results
monthlyPI.textContent = "";
maxLoanAmount.textContent = "";
maxHomePrice.textContent = "";
// Input validation
if (isNaN(annualIncome) || isNaN(downPayment) || isNaN(existingDebts) || isNaN(interestRate) || isNaN(loanTermYears) ||
annualIncome <= 0 || downPayment < 0 || existingDebts < 0 || interestRate <= 0 || loanTermYears <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
// — Calculation Logic —
// Common DTI guidelines (e.g., 36% back-end)
var maxDTI = 0.36;
var monthlyIncome = annualIncome / 12;
var maxTotalMonthlyDebt = monthlyIncome * maxDTI;
// Maximum monthly P&I payment affordable
var maxMonthlyMortgagePayment = maxTotalMonthlyDebt – existingDebts;
// Ensure maxMonthlyMortgagePayment is not negative
if (maxMonthlyMortgagePayment 0) {
// Mortgage payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where: M = Monthly Payment, P = Principal Loan Amount, i = Monthly Interest Rate, n = Loan Term in Months
// Rearranging to solve for P: P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
calculatedMaxLoanAmount = maxMonthlyMortgagePayment * (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths));
} else {
// If interest rate is 0, the loan amount is simply the total payment divided by term months (unrealistic for mortgages but handles edge case)
calculatedMaxLoanAmount = maxMonthlyMortgagePayment * loanTermMonths;
}
// Ensure calculated loan amount is not NaN or negative
if (isNaN(calculatedMaxLoanAmount) || calculatedMaxLoanAmount < 0) {
calculatedMaxLoanAmount = 0;
}
// Estimated Maximum Home Price
var estimatedMaxHomePrice = calculatedMaxLoanAmount + downPayment;
// Display results
monthlyPI.textContent = "$" + maxMonthlyMortgagePayment.toFixed(2);
maxLoanAmount.textContent = "$" + calculatedMaxLoanAmount.toFixed(2);
maxHomePrice.textContent = "$" + estimatedMaxHomePrice.toFixed(2);
}
.calculator-container {
font-family: sans-serif;
max-width: 800px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ddd;
border-radius: 8px;
background-color: #f9f9f9;
}
.calculator-container h2 {
text-align: center;
color: #333;
margin-bottom: 20px;
}
.calculator-inputs {
display: grid;
grid-template-columns: repeat(auto-fit, minmax(250px, 1fr));
gap: 15px;
margin-bottom: 20px;
}
.input-group {
display: flex;
flex-direction: column;
}
.input-group label {
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.input-group input {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 1em;
}
button {
display: block;
width: 100%;
padding: 12px 20px;
background-color: #4CAF50;
color: white;
border: none;
border-radius: 4px;
font-size: 1.1em;
cursor: pointer;
transition: background-color 0.3s ease;
margin-bottom: 20px;
}
button:hover {
background-color: #45a049;
}
.calculator-results {
background-color: #eef;
padding: 15px;
border-radius: 5px;
margin-top: 20px;
}
.calculator-results h3 {
margin-top: 0;
color: #333;
}
.calculator-results p {
margin-bottom: 10px;
font-size: 1.1em;
}
.calculator-results span {
font-weight: bold;
color: #007bff;
}
.calculator-explanation {
margin-top: 30px;
border-top: 1px solid #eee;
padding-top: 20px;
}
.calculator-explanation h3 {
color: #333;
margin-bottom: 15px;
}
.calculator-explanation p,
.calculator-explanation li {
line-height: 1.6;
color: #666;
margin-bottom: 10px;
}
.calculator-explanation ul,
.calculator-explanation ol {
margin-left: 20px;
}