Buying a home is a significant financial decision, and understanding how much you can realistically afford is crucial. A mortgage affordability calculator helps you estimate the maximum loan amount you might qualify for, based on your income, existing debts, down payment, and current interest rates. This tool is not a guarantee of loan approval but serves as a valuable starting point for your home-buying journey.
Key Factors in Affordability:
Annual Household Income: This is the primary driver of how much a lender is willing to lend. Lenders assess your ability to repay the loan based on your consistent income.
Existing Monthly Debt Payments: This includes car loans, student loans, credit card minimum payments, and any other recurring debt obligations. High existing debt can reduce the amount you can borrow for a mortgage.
Down Payment: A larger down payment reduces the loan amount needed and can improve your chances of approval, especially for larger purchases. It also impacts your Loan-to-Value (LTV) ratio.
Interest Rate: Even small changes in interest rates can significantly impact your monthly payments and the total interest paid over the life of the loan. Lower rates generally mean you can afford a larger loan amount for the same monthly payment.
Loan Term: The length of the mortgage (e.g., 15, 30 years) affects your monthly payment. Shorter terms have higher monthly payments but less total interest paid.
How the Calculator Works (Simplified):
This calculator typically uses common lending guidelines, such as the "28/36 rule." The 28% refers to the maximum percentage of your gross monthly income that should go towards housing costs (principal, interest, property taxes, and insurance – PITI). The 36% refers to the maximum percentage of your gross monthly income that should go towards all your monthly debt obligations, including PITI.
The calculator first estimates your maximum housing payment based on your income and existing debts. It then works backward from that maximum housing payment, considering the down payment, interest rate, and loan term, to estimate the maximum loan amount you could potentially finance.
Disclaimer: This calculator provides an estimate for informational purposes only. Actual loan approval and amounts are determined by lenders based on a comprehensive review of your creditworthiness, financial situation, and market conditions.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var existingDebt = parseFloat(document.getElementById("existingDebt").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(existingDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) || annualIncome <= 0 || existingDebt < 0 || downPayment < 0 || interestRate <= 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Assume standard PITI (Property Taxes, Insurance, HOA) is 1% of loan value annually, or 1/12th of 1% monthly.
// This is a simplification; actual PITI varies greatly by location and property.
var annualPITI_percentage = 0.01;
var monthlyPITI_percentage = annualPITI_percentage / 12;
var grossMonthlyIncome = annualIncome / 12;
// Calculate maximum allowed total debt payment (36% rule)
var maxTotalMonthlyDebt = grossMonthlyIncome * 0.36;
// Calculate maximum allowed housing payment (PITI)
var maxMonthlyHousingPayment = maxTotalMonthlyDebt – existingDebt;
// If maxMonthlyHousingPayment is negative, they can't afford any mortgage with current debt.
if (maxMonthlyHousingPayment < 0) {
resultDiv.innerHTML = "Based on your income and existing debt, you may not qualify for a mortgage at this time.";
return;
}
// Add estimated monthly PITI to the maximum housing payment to find the maximum principal & interest payment
// We need to estimate PITI as a percentage of the *loan amount*, so this is iterative or requires an assumption.
// A common simplification is to estimate it based on a percentage of the *total home price* or loan amount.
// Let's simplify: assume PITI is a fixed amount or a percentage of *gross income* for this rough estimate,
// or more accurately, estimate it as a percentage of the loan value.
// For this calculator, let's assume PITI is part of the 28% rule, and we are calculating for P+I first.
// A more robust calculator would ask for property taxes and insurance estimates.
// Let's use the 28% rule for PITI as a maximum, and then subtract existing debt.
var maxPITI_allowed = grossMonthlyIncome * 0.28;
// The maximum we can spend on P+I is maxPITI_allowed – estimated monthly PITI.
// This is tricky without knowing the property value or location.
// A common approach is to estimate PITI as a portion of the loan. Let's assume PITI is 0.1% of loan value per month (1.2% annually).
// Max P+I = maxPITI_allowed – (LoanAmount * 0.001)
// (LoanAmount * 0.001) + P+I = maxPITI_allowed
// This leads to a formula where P+I depends on LoanAmount.
// Alternative simpler approach for this calculator:
// Calculate max total debt payment (36% rule), subtract existing debt to get max for P+I+T+I.
// Let's refine: max housing payment = 28% of gross monthly income.
// Let's assume PITI is 1% of the loan value annually, so 0.000833 of loan value monthly.
// So, Monthly P+I = (Gross Monthly Income * 0.28) – (Loan Amount * 0.000833)
// This still makes P+I dependent on Loan Amount.
// Let's use a common heuristic: max P+I is what's left after subtracting existing debt from the 36% rule,
// and *then* consider if that P+I is reasonable for a loan.
// Let's re-evaluate the rules. 28/36 rule.
// 28% of Gross Monthly Income is max for PITI.
// 36% of Gross Monthly Income is max for total debt (PITI + existing debt).
// So, max PITI = Gross Monthly Income * 0.28
// Max P+I = (Gross Monthly Income * 0.36) – Existing Debt – Estimated Property Taxes & Insurance.
// This calculator will make a simplifying assumption: we will calculate the maximum loan amount based on the maximum *Principal & Interest (P&I)* payment allowed.
// We'll *estimate* property taxes and insurance (TI) as a fixed percentage of the *loan amount*, say 1.2% annually (0.1% monthly).
// So, max P&I = (Gross Monthly Income * 0.36) – Existing Debt – (LoanAmount * 0.001).
// Let's work backwards from the maximum P&I payment.
// First, calculate the maximum P&I payment allowed based on income and existing debt.
// Max P&I payment = (Gross Monthly Income * 0.36) – Existing Debt
// But this doesn't account for taxes and insurance.
// Let's use the 28% rule for PITI as the primary constraint for housing.
// Maximum PITI = Gross Monthly Income * 0.28
// Let's assume TI is 1.2% of the *loan amount* annually.
// Monthly TI = LoanAmount * (0.012 / 12) = LoanAmount * 0.001
// So, Maximum P&I = (Gross Monthly Income * 0.28) – (LoanAmount * 0.001)
// We need to solve for LoanAmount.
// The formula for monthly mortgage payment (P&I) is:
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where:
// M = Monthly Payment (Principal & Interest)
// P = Principal Loan Amount
// i = Monthly interest rate (Annual rate / 12)
// n = Total number of payments (Loan term in years * 12)
// Rearranging to solve for P:
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var monthlyInterestRate = interestRate / 100 / 12;
var numberOfPayments = loanTerm * 12;
// Calculate the monthly payment factor
var monthlyPaymentFactor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
var loanAmountFormulaFactor = (monthlyPaymentFactor – 1) / (monthlyInterestRate * monthlyPaymentFactor);
// Now, let's try to find LoanAmount.
// We know that Max P&I = M.
// And Max P&I = (Gross Monthly Income * 0.28) – (LoanAmount * 0.001)
// So, M = (Gross Monthly Income * 0.28) – (LoanAmount * 0.001)
// Substitute M in the P formula:
// P = [(Gross Monthly Income * 0.28) – (P * 0.001)] * loanAmountFormulaFactor
// P = (Gross Monthly Income * 0.28 * loanAmountFormulaFactor) – (P * 0.001 * loanAmountFormulaFactor)
// P + (P * 0.001 * loanAmountFormulaFactor) = Gross Monthly Income * 0.28 * loanAmountFormulaFactor
// P * (1 + 0.001 * loanAmountFormulaFactor) = Gross Monthly Income * 0.28 * loanAmountFormulaFactor
// P = (Gross Monthly Income * 0.28 * loanAmountFormulaFactor) / (1 + 0.001 * loanAmountFormulaFactor)
// Let's verify this approach. The 36% rule is also important.
// Max Total Monthly Payment (PITI + Existing Debt) <= Gross Monthly Income * 0.36
// So, PITI + Existing Debt <= Gross Monthly Income * 0.36
// PITI = LoanAmount * 0.001 (our assumption for TI)
// LoanAmount * 0.001 + Existing Debt <= Gross Monthly Income * 0.36
// LoanAmount * 0.001 <= (Gross Monthly Income * 0.36) – Existing Debt
// LoanAmount <= [(Gross Monthly Income * 0.36) – Existing Debt] / 0.001
// This means the loan amount is constrained by two factors:
// 1. The maximum P&I payment allowed after accounting for TI (derived from 28% rule).
// 2. The maximum loan amount allowed considering existing debt and the 36% rule.
// Let's calculate the maximum loan based on the 28% rule first.
var maxPIPayment_28_rule = grossMonthlyIncome * 0.28;
// We need to subtract the estimated TI from this to get the max P&I.
// This requires iteration or a formula solving for P where P&I is a function of P.
// var M = maxPIPayment_28_rule – (P * 0.001)
// P = (maxPIPayment_28_rule – (P * 0.001)) * loanAmountFormulaFactor
// This is the equation we derived above.
var maxLoanFrom28Rule = (grossMonthlyIncome * 0.28 * loanAmountFormulaFactor) / (1 + (0.001 * loanAmountFormulaFactor));
// Now, calculate the maximum loan based on the 36% rule.
// Max Total Debt = Gross Monthly Income * 0.36
// Max Principal & Interest & Taxes & Insurance = Max Total Debt – Existing Debt
var maxTotalPaymentAllowed_36_rule = grossMonthlyIncome * 0.36;
var maxPITI_36_rule = maxTotalPaymentAllowed_36_rule – existingDebt;
// If maxPITI_36_rule is negative, they are already over the debt limit.
if (maxPITI_36_rule < 0) {
resultDiv.innerHTML = "Based on your income and existing debt, you may not qualify for a mortgage. Your current debt exceeds 36% of your gross monthly income.";
return;
}
// Now, relate this maxPITI_36_rule to the loan amount.
// PITI = P&I + TI
// Max P&I = maxPITI_36_rule – TI
// var TI = LoanAmount * 0.001
// Max P&I = maxPITI_36_rule – (LoanAmount * 0.001)
// Using the rearranged P formula: P = M * loanAmountFormulaFactor
// M = P / loanAmountFormulaFactor
// So, P / loanAmountFormulaFactor = maxPITI_36_rule – (P * 0.001)
// P = (maxPITI_36_rule – (P * 0.001)) * loanAmountFormulaFactor
// P = maxPITI_36_rule * loanAmountFormulaFactor – (P * 0.001 * loanAmountFormulaFactor)
// P + (P * 0.001 * loanAmountFormulaFactor) = maxPITI_36_rule * loanAmountFormulaFactor
// P * (1 + 0.001 * loanAmountFormulaFactor) = maxPITI_36_rule * loanAmountFormulaFactor
// P = (maxPITI_36_rule * loanAmountFormulaFactor) / (1 + 0.001 * loanAmountFormulaFactor)
var maxLoanFrom36Rule = (maxPITI_36_rule * loanAmountFormulaFactor) / (1 + (0.001 * loanAmountFormulaFactor));
// The affordable loan amount is the *lesser* of the two constraints.
var maxLoanAmount = Math.min(maxLoanFrom28Rule, maxLoanFrom36Rule);
// The maximum home price is the max loan amount plus the down payment.
var maxHomePrice = maxLoanAmount + downPayment;
// Format results
var formattedMaxLoan = maxLoanAmount.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedMaxHomePrice = maxHomePrice.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
resultDiv.innerHTML =
"Estimated Maximum Loan Amount: " + formattedMaxLoan + "" +
"Estimated Maximum Home Price (with your down payment): " + formattedMaxHomePrice + "" +
"(Assumes monthly TI of approx. 0.1% of loan value and adheres to common 28/36 debt-to-income ratios. This is an estimate; consult with a lender.)";
}
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