Purchasing a home is one of the most significant financial decisions you'll make.
Determining how much you can realistically afford for a mortgage is a crucial first step.
This mortgage affordability calculator is designed to give you a clearer picture
by considering various factors that influence your borrowing power and monthly housing costs.
Key Factors in Mortgage Affordability
Annual Household Income: This is the primary driver of your borrowing capacity.
Lenders will assess your total income from all sources to determine how much
you can comfortably repay.
Total Monthly Debt Payments: This includes existing obligations like
car loans, student loans, and credit card payments. Lenders use this to calculate your
Debt-to-Income (DTI) ratio, a critical metric for loan approval.
Down Payment: A larger down payment reduces the loan amount needed,
which can lower your monthly payments and potentially help you avoid Private Mortgage
Insurance (PMI).
Interest Rate: Even small differences in interest rates can significantly
impact your monthly payments and the total interest paid over the life of the loan.
Loan Term: Shorter loan terms generally mean higher monthly payments but
less interest paid overall. Longer terms reduce monthly payments but increase total interest.
Property Taxes: These are annual taxes assessed by local governments based
on the property's value. They are typically paid monthly as part of your mortgage payment
(often held in an escrow account).
Homeowners Insurance: This protects against damage to your home and possessions.
Like property taxes, it's usually paid monthly through escrow.
HOA Fees: If you're buying a property in a community with a Homeowners
Association, you'll have monthly fees that contribute to the upkeep of common areas.
How the Calculator Works
This calculator estimates your maximum affordable home price by working backward
from lender guidelines and your financial inputs. It typically considers two main DTI ratios:
the front-end ratio (housing costs) and the back-end ratio (total debt obligations).
Common lender guidelines suggest:
Front-End DTI (Housing Ratio): Typically should not exceed 28% of your gross monthly income.
Back-End DTI (Total Debt Ratio): Typically should not exceed 36% of your gross monthly income.
The calculator will estimate the maximum monthly mortgage payment you can afford based on these ratios,
then factor in your down payment, interest rate, loan term, property taxes, insurance, and HOA fees
to determine a potential maximum home price.
Example Calculation
Let's say your Annual Household Income is $120,000 ($10,000 per month).
Your Total Monthly Debt Payments (car, student loans, etc.) are $500.
You have a Down Payment of $50,000.
The estimated Annual Interest Rate is 6.5%, over a Loan Term of 30 years.
Estimated Annual Property Tax Rate is 1.2%, Annual Homeowners Insurance is $1,500 ($125 per month),
and Monthly HOA Fees are $100.
Using these inputs, the calculator will determine the maximum loan amount you can qualify for
and, consequently, the maximum home price you can afford. It considers that your total housing
payment (Principal, Interest, Taxes, Insurance, HOA – PITI+HOA) should ideally be around 28-36%
of your gross monthly income, and your total debt (PITI+HOA + other debts) should not exceed 36-43%.
This example might suggest a maximum affordable home price in the range of $400,000 – $500,000,
depending on the specific DTI ratios used and lender overlays.
Disclaimer: This calculator provides an estimate for informational purposes only.
It does not constitute financial advice. Your actual borrowing capacity may vary based on
lender-specific underwriting criteria, credit score, loan programs, and other financial factors.
Consult with a mortgage professional for personalized advice.
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 propertyTaxRate = parseFloat(document.getElementById("propertyTaxRate").value);
var homeInsurance = parseFloat(document.getElementById("homeInsurance").value);
var hoaFees = parseFloat(document.getElementById("hoaFees").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) || isNaN(propertyTaxRate) || isNaN(homeInsurance) || isNaN(hoaFees)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
var monthlyIncome = annualIncome / 12;
var annualInterestRateDecimal = interestRate / 100;
var monthlyInterestRate = annualInterestRateDecimal / 12;
var loanTermMonths = loanTerm * 12;
var propertyTaxPerMonth = (propertyTaxRate / 100) * (downPayment + 1) / 12; // Approximation, typically based on estimated home value
var homeInsurancePerMonth = homeInsurance / 12;
// Common lender guidelines for DTI ratios
var maxHousingRatio = 0.28; // Max PITI + HOA as % of gross monthly income
var maxTotalDebtRatio = 0.36; // Max PITI + HOA + other debts as % of gross monthly income
// Calculate maximum allowed monthly housing payment (PITI + HOA)
var maxAllowedHousingPayment = monthlyIncome * maxHousingRatio;
// Calculate maximum allowed total monthly debt payment
var maxAllowedTotalDebt = monthlyIncome * maxTotalDebtRatio;
// Calculate maximum allowable P&I payment
var maxPiPayment = Math.min(maxAllowedHousingPayment, maxAllowedTotalDebt – monthlyDebt);
// Formula for monthly mortgage payment (P&I): M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Rearranged to solve for P (Principal Loan Amount): P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var principalLoanAmount = 0;
if (monthlyInterestRate > 0) {
principalLoanAmount = maxPiPayment * (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths));
} else { // Handle 0% interest rate case
principalLoanAmount = maxPiPayment * loanTermMonths;
}
var maxAffordableHomePrice = principalLoanAmount + downPayment;
// Calculate the actual PITI + HOA for the estimated max affordable price to check against ratios
// This is a bit circular but helps verify the affordability against the 28% guideline.
// A more accurate calculation would involve iteration or assuming a property tax based on final price.
// For simplicity here, we'll assume property tax is a fixed percentage of the final price.
var estimatedMonthlyPropertyTaxOnFinalPrice = (propertyTaxRate / 100) * maxAffordableHomePrice / 12;
var actualMonthlyHousingCosts = maxPiPayment + estimatedMonthlyPropertyTaxOnFinalPrice + homeInsurancePerMonth + hoaFees;
var actualTotalDebt = actualMonthlyHousingCosts + monthlyDebt;
// Refine the calculation if the maxPiPayment derived from the 36% ratio is too restrictive
// or if the calculated housing costs exceed the 28% or 36% limits when considering PITI+HOA
if (actualTotalDebt > maxAllowedTotalDebt) {
// If total debt exceeds limit, we need to reduce the loan amount.
// Calculate the maximum P&I allowed based on total debt limit.
var adjustedMaxPiPaymentBasedOnTotalDebt = maxAllowedTotalDebt – monthlyDebt – homeInsurancePerMonth – hoaFees – estimatedMonthlyPropertyTaxOnFinalPrice;
if (annualInterestRateDecimal > 0) {
principalLoanAmount = adjustedMaxPiPaymentBasedOnTotalDebt * (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths));
} else {
principalLoanAmount = adjustedMaxPiPaymentBasedOnTotalDebt * loanTermMonths;
}
maxAffordableHomePrice = principalLoanAmount + downPayment;
}
// Ensure the PITI + HOA part is within the housing ratio if possible
// Recalculate property tax based on potentially updated maxAffordableHomePrice
estimatedMonthlyPropertyTaxOnFinalPrice = (propertyTaxRate / 100) * maxAffordableHomePrice / 12;
actualMonthlyHousingCosts = maxPiPayment + estimatedMonthlyPropertyTaxOnFinalPrice + homeInsurancePerMonth + hoaFees;
if (actualMonthlyHousingCosts > maxAllowedHousingPayment) {
// If housing costs alone exceed the 28% limit, we need to reduce P&I further
var adjustedMaxPiPaymentBasedOnHousing = maxAllowedHousingPayment – estimatedMonthlyPropertyTaxOnFinalPrice – homeInsurancePerMonth – hoaFees;
if (annualInterestRateDecimal > 0) {
principalLoanAmount = adjustedMaxPiPaymentBasedOnHousing * (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths));
} else {
principalLoanAmount = adjustedMaxPiPaymentBasedOnHousing * loanTermMonths;
}
maxAffordableHomePrice = principalLoanAmount + downPayment;
}
// Final check on total debt
estimatedMonthlyPropertyTaxOnFinalPrice = (propertyTaxRate / 100) * maxAffordableHomePrice / 12;
var finalPiPayment = maxAffordableHomePrice – downPayment;
if (annualInterestRateDecimal > 0) {
finalPiPayment = (finalPiPayment) * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths)) / (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1);
} else {
finalPiPayment = (maxAffordableHomePrice – downPayment) / loanTermMonths;
}
actualTotalDebt = finalPiPayment + estimatedMonthlyPropertyTaxOnFinalPrice + homeInsurancePerMonth + hoaFees + monthlyDebt;
if (actualTotalDebt > maxAllowedTotalDebt) {
resultDiv.innerHTML = "Based on your inputs and typical lender ratios (e.g., 36% DTI), you may not qualify for a loan that would support this home price. Your total estimated monthly debt payments might exceed affordability limits.";
return;
}
if (actualMonthlyHousingCosts > maxAllowedHousingPayment) {
resultDiv.innerHTML = "Your estimated monthly housing costs (PITI + HOA) are at the upper limit of typical lender recommendations (e.g., 28% DTI). You might want to consider a slightly lower home price for more financial comfort.";
}
resultDiv.innerHTML =
"