Determining how much house you can afford is a crucial step in the home-buying process. This Mortgage Affordability Calculator helps you estimate the maximum mortgage loan amount you might qualify for, and subsequently, the price range of homes you can realistically consider. It takes into account your income, existing debt obligations, down payment, and the prevailing interest rates and loan terms.
Key Factors Considered:
Annual Gross Income: This is your total income before taxes and deductions. Lenders use this as a primary indicator of your ability to repay a loan.
Total Monthly Debt Payments: This includes all recurring monthly payments such as credit card minimums, auto loans, student loans, and personal loans. High debt-to-income ratios can significantly reduce your borrowing capacity.
Down Payment: The amount of money you pay upfront towards the purchase price of the home. A larger down payment reduces the loan amount needed, potentially making a more expensive home affordable and reducing your loan-to-value (LTV) ratio.
Interest Rate: The annual rate at which interest is charged on the loan. Higher interest rates mean higher monthly payments for the same loan amount, thus reducing affordability.
Loan Term: The length of time you have to repay the mortgage, typically 15 or 30 years. Shorter terms usually have higher monthly payments but less interest paid over the life of the loan.
General Guidelines (DTI Ratio):
Lenders often use Debt-to-Income (DTI) ratios to assess affordability. A common guideline is that your total monthly housing expenses (including principal, interest, taxes, and insurance – PITI) should not exceed 28% of your gross monthly income, and your total monthly debt payments (including PITI) should not exceed 36% of your gross monthly income. Our calculator provides an estimate based on these principles.
Disclaimer: This calculator provides an estimation for informational purposes only and does not constitute a loan offer or guarantee of approval. Consult with a mortgage professional for personalized advice.
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");
// Clear previous results
resultDiv.innerHTML = "";
// Validate inputs
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) ||
annualIncome <= 0 || monthlyDebt < 0 || downPayment < 0 || interestRate <= 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var grossMonthlyIncome = annualIncome / 12;
var maxMonthlyHousingPayment = grossMonthlyIncome * 0.28; // Using the 28% rule for housing
var maxTotalDebtPayment = grossMonthlyIncome * 0.36; // Using the 36% rule for total debt
var allowedMonthlyMortgagePayment = maxTotalDebtPayment – monthlyDebt;
// Use the stricter of the two limits for the mortgage payment
var estimatedMonthlyMortgagePayment = Math.min(maxMonthlyHousingPayment, allowedMonthlyMortgagePayment);
if (estimatedMonthlyMortgagePayment 0) {
maxLoanAmount = estimatedMonthlyMortgagePayment * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
// Handle case of 0% interest rate (unlikely for mortgages but good for robustness)
maxLoanAmount = estimatedMonthlyMortgagePayment * numberOfPayments;
}
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML = `
Estimated Maximum Monthly Mortgage Payment (Principal & Interest Only): $${estimatedMonthlyMortgagePayment.toFixed(2)}
Estimated Maximum Mortgage Loan Amount: $${maxLoanAmount.toFixed(2)}
Estimated Maximum Home Purchase Price (including down payment): $${estimatedMaxHomePrice.toFixed(2)}
This is an estimate. Actual loan amounts may vary based on lender, credit score, property taxes, homeowner's insurance, and other factors.
`;
}
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