Buying a home is one of the biggest financial decisions you'll make, and understanding how much you can realistically afford is crucial. A mortgage affordability calculator helps you estimate the maximum loan amount you might qualify for, taking into account your income, existing debts, down payment, and the terms of the loan.
Key Factors in Affordability:
Annual Household Income: This is the primary factor lenders consider. A higher income generally means you can afford a larger loan.
Monthly Debt Payments: Lenders look at your Debt-to-Income (DTI) ratio. This includes car loans, student loans, credit card payments, and any other recurring monthly debt. A lower DTI indicates less financial strain.
Down Payment: A larger down payment reduces the amount you need to borrow, which can significantly impact your monthly payments and the total interest paid over the life of the loan. It also can help you avoid Private Mortgage Insurance (PMI).
Interest Rate: Even a small difference in interest rate can have a substantial impact on your monthly payment and the total cost of the loan. Mortgage rates fluctuate based on market conditions and your creditworthiness.
Loan Term: This is the length of time you have to repay the loan, typically 15 or 30 years. Shorter terms usually have higher monthly payments but result in less interest paid overall.
Lenders often use guidelines like the 28/36 rule, where your total housing costs (including mortgage principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income, and your total debt payments (including housing) should not exceed 36% of your gross monthly income. Our calculator provides an estimate based on these principles, but remember that actual loan approval depends on a lender's specific criteria, credit score, employment history, and other factors.
function calculateAffordability() {
var income = parseFloat(document.getElementById("income").value);
var debt = parseFloat(document.getElementById("debt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultsDiv = document.getElementById("results");
resultsDiv.innerHTML = ""; // Clear previous results
// Validate inputs
if (isNaN(income) || isNaN(debt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) {
resultsDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// — Affordability Calculation Logic —
// Convert annual income to monthly gross income
var monthlyGrossIncome = income / 12;
// Calculate maximum housing payment based on 28% rule (adjust if needed)
var maxHousingPayment = monthlyGrossIncome * 0.28;
// Calculate maximum total debt payment based on 36% rule (adjust if needed)
var maxTotalDebtPayment = monthlyGrossIncome * 0.36;
// Calculate maximum allowable monthly mortgage payment
var maxMortgagePayment = maxTotalDebtPayment – debt;
// Ensure maxMortgagePayment is not negative (if existing debts are very high)
if (maxMortgagePayment 0 && numberOfPayments > 0) {
// Formula for Present Value of an Annuity: PV = PMT * [1 – (1 + r)^-n] / r
maxLoanAmount = affordableMonthlyMortgage * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else if (affordableMonthlyMortgage > 0) {
// If interest rate is 0%, loan amount is simply payment * number of payments
maxLoanAmount = affordableMonthlyMortgage * numberOfPayments;
}
// Total estimated home price is loan amount + down payment
var estimatedHomePrice = maxLoanAmount + downPayment;
// — Display Results —
if (estimatedHomePrice <= downPayment) {
resultsDiv.innerHTML = "Based on your inputs, your estimated affordable home price is up to $" + estimatedHomePrice.toFixed(2) + ". This includes your down payment and the maximum loan you might qualify for. You may have significant existing debt, or your income may not support a mortgage for a higher-priced home with the given interest rate and loan term.";
} else {
resultsDiv.innerHTML =
"Estimated Maximum Affordable Home Price: $" + estimatedHomePrice.toFixed(2) + "" +
"Estimated Maximum Loan Amount: $" + maxLoanAmount.toFixed(2) + "" +
"Estimated Maximum Monthly Mortgage Payment (Principal & Interest): $" + affordableMonthlyMortgage.toFixed(2) + "" +
"This calculator provides an estimate. Actual affordability depends on lender approval, credit score, property taxes, homeowners insurance, and other factors.";
}
}
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