This calculator helps you estimate how much house you can afford based on your income, debts, and desired monthly payment. Understanding your borrowing capacity is a crucial first step in the home-buying process.
Understanding Mortgage Affordability
The maximum amount you can borrow for a mortgage (and thus, the price of the home you can afford) is influenced by several factors. Lenders typically use debt-to-income ratios (DTI) to assess your ability to manage monthly mortgage payments along with your other existing debts.
Front-end DTI Ratio: This ratio compares your potential new housing expenses (principal, interest, taxes, insurance – often called PITI) to your gross monthly income. A common guideline is to keep this below 28%.
Back-end DTI Ratio: This ratio compares all your monthly debt obligations (including the potential new mortgage payment) to your gross monthly income. Lenders often prefer this to be below 36%, though it can go higher depending on your creditworthiness and other factors.
How this calculator works:
It estimates your maximum affordable monthly PITI payment based on lender guidelines (typically aiming for a front-end DTI of around 28% and a back-end DTI of around 36%).
It subtracts your existing monthly debt payments and estimated property taxes, homeowners insurance, and PMI from your gross monthly income to determine how much is left for principal and interest (P&I).
Using the loan term and interest rate, it calculates the maximum loan amount you can afford with that remaining P&I payment.
Finally, it adds your down payment to the maximum loan amount to estimate your total affordable home price.
Important Considerations:
This is an estimate. Your actual borrowing power may vary based on the lender, your credit score, income stability, and current market conditions.
This calculator does not account for closing costs, potential HOA fees, or maintenance expenses, which you should also budget for.
It's always recommended to get pre-approved by a mortgage lender for a precise understanding of your budget.
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function calculateMortgageAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var existingMonthlyDebt = parseFloat(document.getElementById("existingMonthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTermYears").value);
var propertyTaxesAnnual = parseFloat(document.getElementById("propertyTaxesAnnual").value);
var homeownersInsuranceAnnual = parseFloat(document.getElementById("homeownersInsuranceAnnual").value);
var pmiPercentage = parseFloat(document.getElementById("pmiPercentage").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(grossMonthlyIncome) || grossMonthlyIncome <= 0 ||
isNaN(existingMonthlyDebt) || existingMonthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0 ||
isNaN(propertyTaxesAnnual) || propertyTaxesAnnual < 0 ||
isNaN(homeownersInsuranceAnnual) || homeownersInsuranceAnnual < 0 ||
isNaN(pmiPercentage) || pmiPercentage < 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// — Affordability Calculation —
// Target DTI ratios (common guidelines)
var maxFrontEndDTIRatio = 0.28;
var maxBackEndDTIRatio = 0.36;
// Monthly PITI components
var monthlyPropertyTaxes = propertyTaxesAnnual / 12;
var monthlyHomeownersInsurance = homeownersInsuranceAnnual / 12;
var monthlyPMI = (pmiPercentage / 100) * (grossMonthlyIncome); // PMI is often based on income or loan amount, simplified here as a percentage of income for estimation. A more precise calc would use loan amount.
// 1. Calculate maximum affordable monthly housing payment (PITI) based on front-end DTI
var maxAffordablePITI_frontend = grossMonthlyIncome * maxFrontEndDTIRatio;
// 2. Calculate maximum total monthly debt payments based on back-end DTI
var maxTotalMonthlyDebt = grossMonthlyIncome * maxBackEndDTIRatio;
// 3. Determine the maximum allowed P&I payment
// This is the lower of:
// a) What's left after subtracting taxes, insurance, PMI from max PITI (frontend)
// b) What's left after subtracting existing debt and taxes, insurance, PMI from max total debt (backend)
var maxAllowedPAndI_frontend = maxAffordablePITI_frontend – monthlyPropertyTaxes – monthlyHomeownersInsurance – monthlyPMI;
var maxAllowedPAndI_backend = maxTotalMonthlyDebt – existingMonthlyDebt – monthlyPropertyTaxes – monthlyHomeownersInsurance – monthlyPMI;
var maxAllowedPAndI = Math.min(maxAllowedPAndI_frontend, maxAllowedPAndI_backend);
// Check if the allowed P&I is positive
if (maxAllowedPAndI 0) {
// Mortgage payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Rearranged to solve for P: P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
maxLoanAmount = maxAllowedPAndI * (numerator / denominator);
} else {
// If interest rate is 0 (unlikely for mortgages but for completeness)
maxLoanAmount = maxAllowedPAndI * numberOfPayments;
}
// Estimate affordable home price
var affordableHomePrice = maxLoanAmount + downPayment;
// Format results
var formattedMaxLoan = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedAffordableHomePrice = affordableHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxPAndI = maxAllowedPAndI.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyTaxes = monthlyPropertyTaxes.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyInsurance = monthlyHomeownersInsurance.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyPMI = monthlyPMI.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = `
Your Estimated Affordability:
Estimated Maximum Loan Amount: ${formattedMaxLoan}
Estimated Affordable Home Price: ${formattedAffordableHomePrice}
(Based on estimated maximum P&I of ${formattedMaxPAndI}/month, plus monthly taxes ${formattedMonthlyTaxes}, insurance ${formattedMonthlyInsurance}, and PMI ${formattedMonthlyPMI})
`;
}