Use this calculator to estimate how much mortgage you might be able to afford. It considers your income, debts, and desired down payment.
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30 Years
Understanding Mortgage Affordability
Determining how much mortgage you can afford is a crucial step in the home-buying process. It's not just about what a lender *might* offer you, but what you are comfortable paying each month without straining your finances. Several key factors influence your borrowing capacity.
Debt-to-Income Ratio (DTI)
Lenders heavily rely on your Debt-to-Income ratio. This metric compares your total monthly debt payments to your gross monthly income. A common guideline is that your total housing costs (principal, interest, taxes, insurance, and potentially HOA fees) should not exceed 28% of your gross monthly income, and all your debt (including housing) should not exceed 36%.
Income
Your gross annual income (before taxes) is the foundation of affordability calculations. Lenders will want to see stable and verifiable income.
Existing Debts
Recurring monthly debt payments, such as car loans, student loans, and credit card minimum payments, reduce the amount of income available for a mortgage. The calculator accounts for these existing obligations.
Down Payment
A larger down payment reduces the amount you need to borrow, which directly impacts your monthly payments and the total interest paid over the life of the loan. It can also help you avoid Private Mortgage Insurance (PMI) if you put down 20% or more.
Interest Rate and Loan Term
The interest rate significantly affects your monthly payment. A lower rate means a lower payment for the same loan amount. The loan term (e.g., 15, 20, or 30 years) also plays a role; shorter terms have higher monthly payments but less total interest paid, while longer terms have lower monthly payments but more total interest.
How the Calculator Works
This calculator uses a common lender guideline that a potential borrower's total housing expense (principal, interest, property taxes, and homeowner's insurance – often estimated) should not exceed 28% of their gross monthly income. It also factors in your existing monthly debt. It then estimates the maximum loan amount you could qualify for based on your down payment, estimated interest rate, and loan term, ensuring your estimated housing payment fits within these guidelines.
Example Calculation:
Let's say you have an annual gross income of $75,000, meaning a gross monthly income of $6,250 ($75,000 / 12). You have total monthly debt payments of $500 (car loan, student loan). You plan a down payment of $20,000. The estimated interest rate is 6.5%, and you're considering a 30-year loan term.
Maximum Housing Payment (28% rule): $6,250 * 0.28 = $1,750
Allowable Debt Payment (36% rule, for context): $6,250 * 0.36 = $2,250 (Total debts including mortgage)
The calculator will then determine the maximum loan amount that results in a principal and interest payment (using the 6.5% rate and 30-year term) that, when added to estimated taxes and insurance, falls within your affordable housing payment, and also ensures your total debt doesn't exceed the 36% DTI rule.
Remember, this is an estimate. Your actual borrowing capacity will be determined by a mortgage lender after a full review of your financial situation.
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 = parseInt(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebt) || monthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var grossMonthlyIncome = annualIncome / 12;
var maxHousingPayment = grossMonthlyIncome * 0.28; // 28% rule for PITI
var maxTotalDebtPayment = grossMonthlyIncome * 0.36; // 36% rule for all debts
// Simplified estimation for property taxes and homeowner's insurance (PITI component)
// This is a VERY rough estimate and can vary wildly by location and home value.
// For a more accurate calculation, these would need to be separate inputs or more sophisticated estimates.
var estimatedAnnualTaxesAndInsurance = (annualIncome * 0.01); // Example: 1% of annual income
var estimatedMonthlyTaxesAndInsurance = estimatedAnnualTaxesAndInsurance / 12;
var maxPrincipalAndInterest = maxHousingPayment – estimatedMonthlyTaxesAndInsurance;
if (maxPrincipalAndInterest 0) {
// Formula for present value of an annuity: PV = PMT * [1 – (1 + r)^-n] / r
maxLoanAmount = maxPrincipalAndInterest * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
// Handle zero interest rate case (though unlikely for mortgages)
maxLoanAmount = maxPrincipalAndInterest * numberOfPayments;
}
// Check if the total estimated debt (including estimated mortgage P&I) exceeds the 36% DTI limit
var estimatedMonthlyMortgagePayment = maxPrincipalAndInterest; // This is the P&I we calculated for
var totalEstimatedMonthlyDebt = monthlyDebt + estimatedMonthlyMortgagePayment;
if (totalEstimatedMonthlyDebt > maxTotalDebtPayment) {
// If exceeding 36% DTI, we need to reduce the maxLoanAmount
// Calculate how much of the maxTotalDebtPayment is available for P&I
var availableForPIFromDTI = maxTotalDebtPayment – monthlyDebt;
if (availableForPIFromDTI 0) {
maxLoanAmount = availableForPIFromDTI * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
maxLoanAmount = availableForPIFromDTI * numberOfPayments;
}
}
var estimatedHomePrice = maxLoanAmount + downPayment;
// Display results
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedEstimatedHomePrice = estimatedHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxHousingPayment = maxHousingPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyDebt = monthlyDebt.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedEstimatedMonthlyMortgagePayment = estimatedMonthlyMortgagePayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = `
Your Estimated Affordability:
Maximum Estimated Home Price: ${formattedEstimatedHomePrice}
Estimated Maximum Mortgage Loan Amount: ${formattedMaxLoanAmount}
Estimated Maximum Monthly Housing Payment (PITI): ${formattedMaxHousingPayment}
Estimated Monthly Mortgage Payment (Principal & Interest): ${formattedEstimatedMonthlyMortgagePayment}
Note: This includes estimations for property taxes and homeowner's insurance. Actual costs may vary.
Your estimated total monthly debt payments (including estimated mortgage P&I and existing debts) should ideally stay below ${(maxTotalDebtPayment).toLocaleString(undefined, { style: 'currency', currency: 'USD' })} (${(maxTotalDebtPayment / grossMonthlyIncome * 100).toFixed(1)}% of your gross monthly income).
`;
}