Understanding how much house you can afford is a crucial step in the home-buying process. A mortgage affordability calculator helps you estimate the maximum loan amount you might qualify for, based on your income, debts, and estimated mortgage interest rates. This tool can guide your house hunting by setting realistic price expectations.
How the Calculator Works
This calculator uses a common guideline for mortgage affordability, often referred to as the "28/36 rule". This rule suggests that your total housing costs (including mortgage principal and interest, property taxes, homeowner's insurance, and potentially HOA fees) should not exceed 28% of your gross monthly income, and your total debt payments (including housing costs and other loans like car payments, student loans, and credit card minimums) should not exceed 36% of your gross monthly income.
The calculator will first determine the maximum monthly housing payment you can afford based on the 28% rule. Then, it will factor in your existing monthly debt payments and the 36% rule to refine the maximum affordable housing payment. Finally, it uses an estimated mortgage interest rate and loan term to calculate the approximate maximum mortgage amount you could borrow.
Inputs Explained:
Gross Monthly Income: Your total income before taxes and other deductions.
Estimated Monthly Property Taxes: Your projected annual property taxes divided by 12.
Estimated Monthly Homeowner's Insurance: Your projected annual homeowner's insurance premium divided by 12.
Current Monthly Debt Payments: The total of all your minimum monthly debt payments (car loans, student loans, credit cards, personal loans, etc.).
Estimated Mortgage Interest Rate (%): The annual interest rate you expect for your mortgage.
Desired Mortgage Loan Term (Years): The number of years you plan to take to repay the mortgage.
function calculateMortgageAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var estimatedPropertyTaxes = parseFloat(document.getElementById("estimatedPropertyTaxes").value);
var estimatedHomeownersInsurance = parseFloat(document.getElementById("estimatedHomeownersInsurance").value);
var currentMonthlyDebt = parseFloat(document.getElementById("currentMonthlyDebt").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(grossMonthlyIncome) || isNaN(estimatedPropertyTaxes) || isNaN(estimatedHomeownersInsurance) || isNaN(currentMonthlyDebt) || isNaN(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// Rule 1: Housing costs (PITI) shouldn't exceed 28% of gross monthly income
var maxHousingPayment28Percent = grossMonthlyIncome * 0.28;
// Rule 2: Total debt (PITI + other debts) shouldn't exceed 36% of gross monthly income
var maxTotalDebtPayment36Percent = grossMonthlyIncome * 0.36;
// Calculate the maximum PITI allowed by the 36% rule
var maxPitiBy36Percent = maxTotalDebtPayment36Percent – currentMonthlyDebt;
// The actual maximum PITI is the lower of the two rules
var maxPiti = Math.min(maxHousingPayment28Percent, maxPitiBy36Percent);
// Calculate the maximum principal and interest (P&I) payment
var maxPiPayment = maxPiti – estimatedPropertyTaxes – estimatedHomeownersInsurance;
if (maxPiPayment 0) {
// Formula for Present Value of an Annuity
// PV = PMT * [1 – (1 + r)^-n] / r
maxMortgageAmount = maxPiPayment * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
// If interest rate is 0, mortgage amount is simply P&I payment * number of payments
maxMortgageAmount = maxPiPayment * numberOfPayments;
}
// Format results
var formattedMaxMortgageAmount = maxMortgageAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxPiti = maxPiti.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxPiPayment = maxPiPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML =
"
Your Estimated Affordability
" +
"Maximum Affordable Monthly Housing Payment (PITI): " + formattedMaxPiti + "" +
"(This includes Principal & Interest, Property Taxes, and Homeowner's Insurance)" +
"Estimated Maximum Mortgage Amount: " + formattedMaxMortgageAmount + "" +
"(This is an estimate and does not guarantee loan approval. Lender requirements may vary.)";
}