This calculator helps you estimate how much home you can afford by considering your income, debts, and desired down payment. Understanding your affordability is a crucial first step in the home-buying process.
Understanding Mortgage Affordability
Mortgage affordability is determined by several factors, including your income, existing debts, and the terms of the loan you're considering. Lenders typically use debt-to-income (DTI) ratios to assess your ability to repay a mortgage. A common guideline is that your total housing expenses (principal, interest, taxes, and insurance) 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 provides an estimate by working backward from these DTI ratios and considering your down payment. It helps you get a ballpark figure of the maximum loan amount you might qualify for, which directly translates to the price range of homes you should be looking at.
Key Factors:
Annual Gross Income: Your total income before taxes. This is the primary basis for DTI calculations.
Total Monthly Debt Payments: This includes car loans, student loans, credit card minimum payments, and any other recurring debt obligations.
Down Payment: The upfront cash you contribute towards the purchase price of the home. A larger down payment reduces the loan amount needed.
Estimated Annual Interest Rate: The interest rate on your mortgage significantly impacts your monthly payment and the total cost of the loan.
Loan Term: The duration over which you'll repay the mortgage (e.g., 15 or 30 years). Shorter terms generally have higher monthly payments but less interest paid overall.
Remember, this is an estimation tool. Your actual borrowing capacity may vary based on lender-specific policies, credit score, down payment size, and other financial factors. It's always recommended to speak with a mortgage lender for a pre-approval.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var resultElement = document.getElementById("result");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(annualInterestRate) || isNaN(loanTermYears)) {
resultElement.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// Lender guidelines (common DTI ratios)
var maxHousingRatio = 0.28; // PITI (Principal, Interest, Taxes, Insurance) as % of gross monthly income
var maxTotalDTI = 0.36; // Total debt payments as % of gross monthly income
var grossMonthlyIncome = annualIncome / 12;
// Calculate maximum allowable monthly PITI payment
var maxMonthlyPITI = grossMonthlyIncome * maxHousingRatio;
// Calculate maximum allowable total monthly debt payment
var maxMonthlyTotalDebt = grossMonthlyIncome * maxTotalDTI;
// Calculate maximum allowable monthly mortgage payment (P&I only)
var maxMonthlyMortgagePayment = maxMonthlyTotalDebt – monthlyDebt;
// Ensure the mortgage payment doesn't exceed the housing ratio limit
if (maxMonthlyMortgagePayment > maxMonthlyPITI) {
maxMonthlyMortgagePayment = maxMonthlyPITI;
}
if (maxMonthlyMortgagePayment 0) {
var numerator = Math.pow((1 + monthlyInterestRate), numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow((1 + monthlyInterestRate), numberOfPayments);
maxLoanAmount = maxMonthlyMortgagePayment * (numerator / denominator);
} else { // Handle 0% interest rate scenario (though unlikely for mortgages)
maxLoanAmount = maxMonthlyMortgagePayment * numberOfPayments;
}
// Calculate maximum home price
var maxHomePrice = maxLoanAmount + downPayment;
// Display results
resultElement.innerHTML =
"Estimated Maximum Monthly Mortgage Payment (Principal & Interest): $" + maxMonthlyMortgagePayment.toFixed(2) + "" +
"Estimated Maximum Loan Amount: $" + maxLoanAmount.toFixed(2) + "" +
"Estimated Maximum Home Price You Can Afford: $" + maxHomePrice.toFixed(2) + "" +
"Note: This estimate excludes property taxes, homeowner's insurance, and potential HOA fees. Actual loan approval depends on lender, credit score, and full financial evaluation.";
}
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