Determining how much house you can afford is a crucial step in the home-buying process. It's not just about the sticker price of the home; it involves understanding your income, existing debts, down payment, and the ongoing costs associated with a mortgage, including interest and principal payments. Lenders use various metrics to assess your ability to repay a loan, and this calculator aims to give you a personalized estimate.
Key Factors in Mortgage Affordability:
Gross Monthly Income: This is your income before taxes and other deductions. Lenders typically look at this figure to gauge your overall earning capacity.
Total Monthly Debt Payments: This includes all your recurring monthly debt obligations, such as credit card payments, car loans, student loans, and personal loans. Importantly, it *excludes* your proposed mortgage payment. Lenders use this to calculate your Debt-to-Income (DTI) ratio.
Down Payment: The upfront cash you pay towards the purchase price of the home. A larger down payment reduces the amount you need to borrow, potentially lowering your monthly payments and the total interest paid over the life of the loan. It can also help you avoid Private Mortgage Insurance (PMI).
Interest Rate: This is the percentage charged by the lender for borrowing money. Even a small difference in interest rates can significantly impact your monthly payments and the total cost of the loan over time. This calculator uses an *estimated* annual interest rate.
Loan Term: The length of time you have to repay the mortgage, typically expressed in years (e.g., 15, 20, or 30 years). Shorter loan terms generally mean higher monthly payments but less total interest paid.
How the Calculator Works:
This calculator estimates your maximum affordable mortgage payment based on common lending guidelines. It considers your gross monthly income and existing debt obligations to determine how much of your income can be allocated to a mortgage. A common guideline is that your total housing expenses (including principal, interest, taxes, insurance, and HOA fees – often referred to as PITI) should not exceed 28% of your gross monthly income, and your total debt payments (including the proposed mortgage) should not exceed 36% of your gross monthly income. This calculator simplifies this by focusing on the maximum *mortgage principal and interest (P&I)* payment you might afford based on these ratios and then calculates the potential loan amount.
Please note that this is an estimation. Actual loan approval depends on many other factors, including your credit score, employment history, lender-specific policies, and the cost of property taxes and homeowners insurance in your desired area.
function calculateMortgageAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var debtPayments = parseFloat(document.getElementById("debtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(monthlyIncome) || isNaN(debtPayments) || isNaN(downPayment) || isNaN(annualInterestRate) || isNaN(loanTermYears) ||
monthlyIncome < 0 || debtPayments < 0 || downPayment < 0 || annualInterestRate < 0 || loanTermYears <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Using common DTI ratios as a guideline (e.g., 28% for housing, 36% total debt)
var maxHousingExpenseRatio = 0.28; // Front-end ratio (housing only)
var maxTotalDebtRatio = 0.36; // Back-end ratio (housing + all other debts)
var maxHousingPayment = monthlyIncome * maxHousingExpenseRatio;
var maxTotalDebtPayment = monthlyIncome * maxTotalDebtRatio;
// Calculate the maximum allowable mortgage payment (principal & interest only)
// This is the lesser of what the front-end ratio allows, or what's left after other debts from the back-end ratio.
var maxMortgagePayment = Math.min(maxHousingPayment, maxTotalDebtPayment – debtPayments);
// Ensure maxMortgagePayment is not negative
if (maxMortgagePayment 0 && monthlyInterestRate >= 0) {
if (monthlyInterestRate === 0) {
// If interest rate is 0, the loan amount is simply payment * number of payments
maxLoanAmount = maxMortgagePayment * numberOfPayments;
} else {
// Standard mortgage payment formula rearranged to solve for P (principal/loan amount)
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// P = M [ (1 + i)^n – 1] / i(1 + i)^n
var component1 = Math.pow(1 + monthlyInterestRate, numberOfPayments);
maxLoanAmount = maxMortgagePayment * (component1 – 1) / (monthlyInterestRate * component1);
}
}
// The total home price affordable is the max loan amount plus the down payment
var maxHomePrice = maxLoanAmount + downPayment;
// Format results
var formattedMaxMortgagePayment = maxMortgagePayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxHomePrice = maxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = "Based on your inputs, your estimated maximum affordable monthly mortgage payment (Principal & Interest only) is: " + formattedMaxMortgagePayment + "" +
"This could support a loan amount of approximately: " + formattedMaxLoanAmount + "" +
"Making your estimated maximum affordable home price (including your down payment) around: " + formattedMaxHomePrice + "" +
"Note: This is an estimation. Actual affordability depends on lender policies, credit score, property taxes, insurance, and other factors.";
}