Determining how much house you can afford is a crucial step in the home-buying process.
This Mortgage Affordability Calculator helps you estimate your potential borrowing power
based on your income, existing debts, down payment, and loan terms. It's important to
remember that this is an estimate, and your actual loan approval will depend on a
lender's specific underwriting criteria, including your credit score, debt-to-income
ratio, employment history, and the current housing market conditions.
Key Factors:
Annual Income: Your total earnings before taxes. Lenders use this to assess your ability to repay a loan.
Total Monthly Debt Payments: This includes recurring payments for car loans, student loans, credit cards, and any other outstanding debts (excluding your potential new mortgage payment). Lenders often look at your Debt-to-Income (DTI) ratio, which is your total monthly debt payments divided by your gross monthly income. A lower DTI generally means you can afford more.
Down Payment: The upfront cash you pay towards the purchase price of the home. A larger down payment reduces the loan amount needed and can lead to better interest rates and lower monthly payments.
Interest Rate: The annual percentage charged by the lender. Even small differences in interest rates can significantly impact your monthly payments and the total cost of the loan over time.
Loan Term: The number of years you have to repay the mortgage. Shorter terms typically have higher monthly payments but lower overall interest paid, while longer terms have lower monthly payments but higher overall interest.
The calculation generally considers that your total housing expenses (including mortgage principal and interest, property taxes, homeowner's insurance, and potentially HOA fees) should not exceed a certain percentage of your gross monthly income. Similarly, your total debt obligations (including the estimated new mortgage payment) are also evaluated against your income. This calculator provides a simplified estimate to guide your initial search.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebtPayments) || monthlyDebtPayments < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var grossMonthlyIncome = annualIncome / 12;
var maxTotalDebtPaymentRatio = 0.43; // Common lender guideline: 43% of gross monthly income for total debt
var maxHousingPaymentRatio = 0.28; // Common lender guideline: 28% of gross monthly income for housing costs
// Calculate maximum allowed total monthly debt payment
var maxAllowedTotalDebt = grossMonthlyIncome * maxTotalDebtPaymentRatio;
// Calculate maximum allowed monthly mortgage payment (principal & interest + taxes + insurance)
var maxAllowedHousingPayment = grossMonthlyIncome * maxHousingPaymentRatio;
// Calculate maximum monthly payment allowed for P&I (subtracting estimated taxes and insurance)
// These are rough estimates and vary greatly by location and property type.
// For simplicity, we'll estimate property tax at 1.2% annually and insurance at 0.5% annually of the home value.
// We'll need to make an assumption about the home value to estimate these, or calculate max loan first.
// Let's focus on max P&I first, and then estimate affordability.
// Calculate the maximum principal and interest (P&I) payment based on total debt constraint
var maxAllowedPIMostRestrictive = maxAllowedTotalDebt – monthlyDebtPayments;
if (maxAllowedPIMostRestrictive < 0) {
maxAllowedPIMostRestrictive = 0;
}
// We need to find the maximum loan amount (Home Price – Down Payment) that results in a P&I payment 0) {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
maxLoanAmountBasedOnDebt = maxAllowedPIMostRestrictive * (factor – 1) / (monthlyInterestRate * factor);
} else {
// Handle zero interest rate case (though unlikely for mortgages)
maxLoanAmountBasedOnDebt = maxAllowedPIMostRestrictive * numberOfPayments;
}
// Now, let's consider the housing payment ratio. This typically includes P&I, Property Taxes, and Homeowner's Insurance.
// Estimating property taxes and insurance is complex without knowing the home price.
// A common approach is to estimate these as a percentage of the loan amount or home price.
// Let's try to work backwards assuming a *potential* home price that fits within the max allowed housing payment.
// However, the most straightforward approach is to calculate the max loan amount first and then see what *total* payment it implies.
// For a more robust calculation, we need to *estimate* taxes and insurance.
// Let's assume a rough estimate of 1.2% annually for property taxes and 0.5% for insurance on the home value.
// This means roughly 1.7% of the Home Value per year for T&I, or (1.7 / 100) / 12 = 0.0014167 per month.
// MaxHousingPayment = P&I + T&I
// MaxHousingPayment = M + (HomePrice * 0.0014167)
// And HomePrice = LoanAmount + DownPayment
// So, MaxHousingPayment = M + ((LoanAmount + DownPayment) * 0.0014167)
// This becomes an iterative or more complex calculation to solve for LoanAmount directly.
// A simpler, common approximation for affordability calculators:
// Assume max allowed P&I payment is derived from the housing ratio, after deducting *estimated* taxes and insurance.
// Let's assume T&I is roughly 15-25% of the total housing payment.
// So, P&I would be 75-85% of maxAllowedHousingPayment. Let's use 80% as an estimate.
var estimatedPniPercentageOfHousing = 0.80;
var maxAllowedPIMostRestrictiveByHousing = maxAllowedHousingPayment * estimatedPniPercentageOfHousing;
// We now have two potential maximum P&I amounts:
// 1. maxAllowedPIMostRestrictive (from total debt ratio)
// 2. maxAllowedPIMostRestrictiveByHousing (from housing ratio, assuming T&I)
// The lower of these two will be the effective maximum P&I payment the borrower can afford.
var effectiveMaxPIMonthly = Math.min(maxAllowedPIMostRestrictive, maxAllowedPIMostRestrictiveByHousing);
var maxLoanAmount = 0;
if (effectiveMaxPIMonthly > 0) {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
if (monthlyInterestRate > 0) {
maxLoanAmount = effectiveMaxPIMonthly * (factor – 1) / (monthlyInterestRate * factor);
} else {
maxLoanAmount = effectiveMaxPIMonthly * numberOfPayments;
}
}
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
// Calculate actual monthly P&I for this estimated max loan amount
var actualMonthlyPI = 0;
if (maxLoanAmount > 0 && monthlyInterestRate > 0) {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
actualMonthlyPI = maxLoanAmount * (monthlyInterestRate * factor) / (factor – 1);
} else if (maxLoanAmount > 0 && monthlyInterestRate === 0) {
actualMonthlyPI = maxLoanAmount / numberOfPayments;
}
// Estimate monthly taxes and insurance for the calculated home price
// Using 1.2% annual property tax and 0.5% annual insurance on home price.
var estimatedMonthlyTaxes = (estimatedMaxHomePrice * 0.012) / 12;
var estimatedMonthlyInsurance = (estimatedMaxHomePrice * 0.005) / 12;
var totalEstimatedMonthlyHousingCost = actualMonthlyPI + estimatedMonthlyTaxes + estimatedMonthlyInsurance;
// Calculate final DTI
var totalMonthlyObligations = monthlyDebtPayments + actualMonthlyPI + estimatedMonthlyTaxes + estimatedMonthlyInsurance;
var finalDTI = (totalMonthlyObligations / (grossMonthlyIncome * 12)) * 100; // Display as percentage of annual income
var housingRatio = (totalEstimatedMonthlyHousingCost / grossMonthlyIncome) * 100;
var affordabilityMessage = "";
if (estimatedMaxHomePrice > 0) {
affordabilityMessage += "Estimated Maximum Home Price You Can Afford: $" + estimatedMaxHomePrice.toFixed(2) + "";
affordabilityMessage += "Estimated Maximum Loan Amount: $" + maxLoanAmount.toFixed(2) + "";
affordabilityMessage += "Estimated Monthly Principal & Interest (P&I): $" + actualMonthlyPI.toFixed(2) + "";
affordabilityMessage += "Estimated Monthly Property Taxes: $" + estimatedMonthlyTaxes.toFixed(2) + "";
affordabilityMessage += "Estimated Monthly Homeowner's Insurance: $" + estimatedMonthlyInsurance.toFixed(2) + "";
affordabilityMessage += "Total Estimated Monthly Housing Payment: $" + totalEstimatedMonthlyHousingCost.toFixed(2) + "";
affordabilityMessage += "(Based on an estimated annual property tax rate of 1.2% and homeowner's insurance rate of 0.5% of home price)";
affordabilityMessage += "Estimated Total Monthly Debt Payments (including housing): $" + totalMonthlyObligations.toFixed(2) + "";
affordabilityMessage += "Estimated Debt-to-Income Ratio (DTI): " + finalDTI.toFixed(1) + "%";
affordabilityMessage += "Estimated Housing Ratio (Housing Payment / Gross Monthly Income): " + housingRatio.toFixed(1) + "%";
affordabilityMessage += "Disclaimer: This is an estimate only. Actual affordability depends on lender approval, credit score, market conditions, and specific loan products. It is recommended to consult with a mortgage professional.";
} else {
affordabilityMessage = "Based on your inputs, your estimated maximum home price is very low or zero. You may need to increase your income, reduce debt, increase your down payment, or explore different loan terms/rates.";
}
resultDiv.innerHTML = affordabilityMessage;
}
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