Mortgage Affordability Calculator
.calculator-container {
font-family: 'Arial', sans-serif;
border: 1px solid #ccc;
padding: 20px;
border-radius: 8px;
max-width: 600px;
margin: 20px auto;
background-color: #f9f9f9;
}
.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: #333;
}
.input-group input {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 1rem;
}
.calculator-inputs button {
background-color: #007bff;
color: white;
padding: 12px 20px;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 1.1rem;
transition: background-color 0.3s ease;
grid-column: 1 / -1; /* Span across all columns */
margin-top: 10px;
}
.calculator-inputs button:hover {
background-color: #0056b3;
}
.calculator-result {
margin-top: 20px;
padding: 15px;
background-color: #e9ecef;
border: 1px solid #ddd;
border-radius: 4px;
text-align: center;
font-size: 1.1rem;
color: #444;
}
.calculator-result strong {
color: #0056b3;
}
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var existingDebt = parseFloat(document.getElementById("existingDebt").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");
if (isNaN(annualIncome) || isNaN(existingDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "
Error: Please enter valid numbers for all fields.";
return;
}
// Lender typically allows DTI of 28% for housing costs and 36% for total debt
var maxHousingPayment = annualIncome * 0.28 / 12;
var maxTotalDebtPayment = annualIncome * 0.36 / 12;
var maxMonthlyMortgagePayment = maxTotalDebtPayment – existingDebt;
// Ensure maxMonthlyMortgagePayment is not negative
if (maxMonthlyMortgagePayment 0) {
// Formula for maximum loan amount based on monthly payment (M), interest rate (r), and number of payments (n)
// M = P [ r(1 + r)^n ] / [ (1 + r)^n – 1] => P = M [ (1 + r)^n – 1] / [ r(1 + r)^n ]
maxLoanAmount = affordableMonthlyPayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else {
// If interest rate is 0, loan amount is simply monthly payment * number of payments
maxLoanAmount = affordableMonthlyPayment * numberOfPayments;
}
// Maximum affordable home price is the maximum loan amount plus the down payment
var maxAffordablePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML = "Based on your inputs, the estimated maximum affordable home price is:
$" + maxAffordablePrice.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",") + ".";
resultDiv.innerHTML += "Estimated maximum monthly mortgage payment (Principal & Interest):
$" + affordableMonthlyPayment.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ",") + ".";
}
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. This involves understanding various financial factors that lenders consider when evaluating your mortgage application. Our Mortgage Affordability Calculator helps you estimate your potential purchasing power.
Key Factors in Mortgage Affordability:
- Annual Household Income: This is the primary driver of your affordability. Lenders look at your total gross income before taxes.
- Existing Monthly Debt Payments: This includes payments for car loans, student loans, credit cards, and any other recurring debts. These are factored into your Debt-to-Income (DTI) ratio.
- Down Payment: The amount of cash you can put down upfront significantly impacts your loan amount and, therefore, the total price of the home you can afford. A larger down payment generally reduces your loan-to-value (LTV) ratio and can lead to better loan terms.
- Interest Rate: Even a small change in the interest rate can have a substantial effect on your monthly payments and the total interest paid over the life of the loan.
- Loan Term: The duration of the mortgage (e.g., 15, 20, or 30 years) affects your monthly payment. Shorter terms mean higher monthly payments but less interest paid overall.
How Lenders Assess Affordability (The 28/36 Rule):
A common guideline used by lenders is the "28/36 rule." This rule suggests that your total monthly housing expenses (including principal, interest, property taxes, and homeowner's insurance – often called PITI) should not exceed 28% of your gross monthly income. Additionally, your total monthly debt obligations (including housing costs) should not exceed 36% of your gross monthly income.
Our calculator simplifies this by using these percentages to estimate your maximum affordable monthly mortgage payment and, subsequently, the maximum loan amount you might qualify for, given your down payment and loan terms.
Example Calculation:
Let's say you have an Annual Household Income of $90,000. You have existing monthly debt payments of $600 (car loan, student loan). You plan to make a Down Payment of $30,000. The estimated Interest Rate is 6.75%, and you're considering a Loan Term of 30 years.
- Maximum Housing Payment (28% of $90,000 / 12 months): $2,250
- Maximum Total Debt Payment (36% of $90,000 / 12 months): $2,700
- Maximum Monthly Mortgage Payment (Max Total Debt – Existing Debt): $2,700 – $600 = $2,100
- The more conservative limit for your monthly mortgage payment is $2,100.
- Using a 6.75% interest rate and a 30-year term, a $2,100 monthly payment can support a loan amount of approximately $321,000.
- Adding your $30,000 down payment, the estimated maximum affordable home price would be around $351,000.
Remember, this is an estimate. Your actual borrowing capacity will depend on the specific lender, your credit score, employment history, and other financial factors.