Buying a home is one of the biggest financial decisions you'll make. The Mortgage Affordability Calculator helps you estimate how much home you can realistically afford by taking into account your income, existing debts, down payment, and the terms of the mortgage itself.
Key Factors:
Annual Income: Your total income before taxes. Lenders use this to gauge your ability to repay the loan.
Total Monthly Debt Payments: This includes all your recurring monthly obligations like credit card payments, student loans, car loans, and personal loans. These debts reduce the amount of income available for a mortgage payment.
Down Payment: The upfront cash you pay towards the home's purchase price. A larger down payment reduces the loan amount needed and can lead to better interest rates and lower monthly payments.
Annual Interest Rate: The percentage charged by the lender on the loan amount. A lower interest rate means a lower monthly payment.
Loan Term (Years): The duration over which you agree to repay the loan. Common terms are 15, 20, or 30 years. Longer terms result in lower monthly payments but more interest paid over the life of the loan.
How it Works:
This calculator estimates your maximum affordable mortgage payment based on common lending guidelines, typically a Debt-to-Income (DTI) ratio. A common guideline is that your total monthly housing costs (including principal, interest, taxes, and insurance – PITI) should not exceed 28% of your gross monthly income, and your total debt payments (including the new mortgage) should not exceed 36% of your gross monthly income. This calculator simplifies this by focusing on the maximum loan amount you could qualify for based on your income and existing debts, assuming a target monthly payment.
The calculator determines the maximum monthly payment you can afford by subtracting your total monthly debt payments from a portion of your gross monthly income (often capped by DTI ratios). Then, it uses the mortgage payment formula to calculate the maximum loan amount based on this affordable monthly payment, the given interest rate, and loan term. Finally, it adds your down payment to estimate the maximum home price you can afford.
Example:
Let's say you have an Annual Income of $80,000, Total Monthly Debt Payments of $600, a Down Payment of $20,000, an Annual Interest Rate of 7%, and a Loan Term of 30 years.
Your gross monthly income is $80,000 / 12 = $6,666.67.
A common guideline is to keep total debt payments (including mortgage) below 36% of gross monthly income, so $6,666.67 * 0.36 = $2,400.
This leaves $2,400 – $600 (existing debt) = $1,800 as your maximum affordable monthly mortgage payment.
Using the mortgage formula with a monthly payment of $1,800, an interest rate of 7%/12 per month, and 30*12 months, the maximum loan amount you could afford is approximately $239,257.
Adding your down payment of $20,000, the estimated maximum affordable home price would be around $259,257.
Disclaimer: This is an estimate for informational purposes only. Consult with a mortgage professional for accurate pre-approval and personalized advice. Property taxes, homeowner's insurance, and potential HOA fees are not included in this calculation and will increase your actual monthly housing costs.
function calculateAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").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");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (annualIncome <= 0 || monthlyDebt < 0 || downPayment < 0 || interestRate < 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter realistic positive values for income, down payment, interest rate, and loan term. Monthly debt can be zero.";
return;
}
// — Calculation Logic —
// Assuming a common DTI ratio of 36% for total debt payments
var grossMonthlyIncome = annualIncome / 12;
var maxTotalDebtPayment = grossMonthlyIncome * 0.36;
var maxMonthlyMortgagePayment = maxTotalDebtPayment – monthlyDebt;
if (maxMonthlyMortgagePayment <= 0) {
resultDiv.innerHTML = "Based on your income and existing debts, you may not qualify for a mortgage at this time. Your current debt obligations are too high relative to your income.";
return;
}
// Mortgage payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where:
// M = Monthly Payment
// P = Principal Loan Amount
// i = Monthly Interest Rate
// n = Total Number of Payments (loan term in months)
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
// Rearranging the formula to solve for P (Principal Loan Amount):
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var principalLoanAmount = maxMonthlyMortgagePayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
var affordableHomePrice = principalLoanAmount + downPayment;
// — Display Results —
resultDiv.innerHTML =
"