Mortgage Affordability Calculator
Understanding Mortgage Affordability
Buying a home is one of the biggest financial decisions you'll make. Understanding how much house you can realistically afford is crucial before you start house hunting. This mortgage affordability calculator is designed to give you a quick estimate of the maximum mortgage amount you might qualify for, based on your income, existing debts, down payment, and loan terms.
Key Factors in Mortgage Affordability:
- Annual Income: This is the primary driver of your borrowing capacity. Lenders assess your ability to repay based on your stable income.
- Monthly Debt Payments: This includes all your existing recurring debt obligations like credit card minimum payments, auto loans, student loans, and personal loans. Lenders use these to calculate your Debt-to-Income (DTI) ratio.
- Down Payment: A larger down payment reduces the loan amount needed and can lead to better interest rates and lower monthly payments. It also shows the lender you have some "skin in the game."
- Interest Rate: The annual interest rate significantly impacts your monthly mortgage payment. Even a small difference in interest rate can result in tens of thousands of dollars more or less paid over the life of the loan.
- Loan Term: This is the duration over which you'll repay the mortgage, typically 15 or 30 years. Shorter terms mean higher monthly payments but less interest paid overall. Longer terms mean lower monthly payments but more interest paid over time.
How the Calculator Works:
This calculator uses common lending guidelines to estimate your maximum affordable mortgage. A general rule of thumb is that your total housing costs (including mortgage principal and interest, property taxes, homeowner's insurance, and potentially HOA fees – often referred to as PITI) should not exceed 28% of your gross monthly income. Additionally, your total debt obligations (including the estimated new mortgage payment) should not exceed 36% of your gross monthly income (this is your Debt-to-Income ratio, or DTI).
Our calculator estimates the maximum loan amount you could potentially handle by considering these ratios and then calculates the corresponding monthly payment for that loan amount, given your specified interest rate and loan term. The "maximum affordable loan" displayed is the principal amount you could borrow. The final "Estimated Maximum Monthly Payment" includes an estimate for property taxes and homeowner's insurance, which are crucial components of your actual monthly housing expense.
Disclaimer: This calculator provides an estimate only. Actual loan approval and amounts depend on the lender's specific underwriting criteria, your credit score, employment history, and other factors. It's always recommended to speak with a mortgage professional for personalized advice.
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function calculateMortgageAffordability() {
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) ||
annualIncome < 0 || monthlyDebt < 0 || downPayment < 0 || interestRate < 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// General lending guidelines
var maxHousingRatio = 0.28; // Max % of gross monthly income for housing (PITI)
var maxDtiRatio = 0.36; // Max % of gross monthly income for total debt (DTI)
var grossMonthlyIncome = annualIncome / 12;
// Calculate maximum allowed monthly housing payment (PITI)
var maxMonthlyHousingPayment = grossMonthlyIncome * maxHousingRatio;
// Calculate maximum allowed total monthly debt payment
var maxTotalMonthlyDebt = grossMonthlyIncome * maxDtiRatio;
// Calculate maximum allowed monthly mortgage payment (Principal & Interest only)
var maxMonthlyMortgagePayment = maxTotalMonthlyDebt – monthlyDebt;
// Ensure maxMonthlyMortgagePayment is not negative
if (maxMonthlyMortgagePayment 0) {
maxLoanAmount = maxMonthlyHousingPayment * numberOfPayments;
}
} else {
// Formula to calculate maximum loan amount based on PITI, interest rate, and term
// M = P * [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where M is PITI, P is Principal (loan amount), i is monthly interest rate, n is number of payments.
// Rearranging for P: P = M * [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
if (denominator > 0) {
maxLoanAmount = maxMonthlyHousingPayment * (numerator / denominator);
}
}
// Subtract down payment to get estimated maximum home price
var maxHomePrice = maxLoanAmount + downPayment;
// — Recalculate the actual monthly P&I payment for the calculated maxLoanAmount —
var actualMonthlyPI = 0;
if (maxLoanAmount > 0 && monthlyInterestRate > 0 && numberOfPayments > 0) {
var numeratorPI = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
var denominatorPI = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
actualMonthlyPI = maxLoanAmount * (numeratorPI / denominatorPI);
} else if (maxLoanAmount > 0 && monthlyInterestRate === 0 && numberOfPayments > 0) {
actualMonthlyPI = maxLoanAmount / numberOfPayments;
}
// Estimate monthly taxes and insurance (as part of PITI)
// A common rough estimate for Taxes + Insurance is 0.1% of Loan Amount per month (approx 1.2% annually)
// This is highly variable, so this is a very rough estimation.
var estimatedMonthlyTaxesInsurance = maxLoanAmount * 0.001; // 0.1% of loan value per month
var estimatedTotalMonthlyPITI = actualMonthlyPI + estimatedMonthlyTaxesInsurance;
// — Sanity check: ensure calculated PITI doesn't exceed the 28% limit —
if (estimatedTotalMonthlyPITI > maxMonthlyHousingPayment && maxMonthlyHousingPayment > 0) {
// This can happen due to the rough estimation of taxes/insurance.
// A more precise approach would iterate or use a direct PITI calculator.
// For this calculator, we'll cap the P&I payment if the total PITI estimate is too high.
var adjustedMaxMonthlyPI = maxMonthlyHousingPayment – estimatedMonthlyTaxesInsurance;
if (adjustedMaxMonthlyPI 0) {
maxLoanAmount = adjustedMaxMonthlyPI * numberOfPayments;
} else {
maxLoanAmount = 0;
}
} else {
var numeratorAdj = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominatorAdj = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
if (denominatorAdj > 0) {
maxLoanAmount = adjustedMaxMonthlyPI * (numeratorAdj / denominatorAdj);
} else {
maxLoanAmount = 0;
}
}
maxHomePrice = maxLoanAmount + downPayment;
estimatedTotalMonthlyPITI = adjustedMaxMonthlyPI + estimatedMonthlyTaxesInsurance;
}
// Ensure values are not negative after adjustments
maxLoanAmount = Math.max(0, maxLoanAmount);
maxHomePrice = Math.max(0, maxHomePrice);
estimatedTotalMonthlyPITI = Math.max(0, estimatedTotalMonthlyPITI);
// Format numbers for display
var formattedAnnualIncome = annualIncome.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedGrossMonthlyIncome = grossMonthlyIncome.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyDebt = monthlyDebt.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedDownPayment = downPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxHomePrice = maxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedEstimatedTotalMonthlyPITI = estimatedTotalMonthlyPITI.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxMonthlyHousingPayment = maxMonthlyHousingPayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxTotalMonthlyDebt = maxTotalMonthlyDebt.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = "Based on your inputs:" +
"
Gross Monthly Income: " + formattedGrossMonthlyIncome + "" +
"
(Max Housing Payment Limit: " + formattedMaxMonthlyHousingPayment + " at " + (maxHousingRatio * 100).toFixed(1) + "% of gross monthly income)" +
"
(Max Total Debt Limit: " + formattedMaxTotalMonthlyDebt + " at " + (maxDtiRatio * 100).toFixed(1) + "% of gross monthly income)" +
"
Estimated Maximum Loan Amount: " + formattedMaxLoanAmount + "" +
"
Estimated Maximum Home Price: " + formattedMaxHomePrice + "" +
"
Estimated Total Monthly Housing Payment (PITI): " + formattedEstimatedTotalMonthlyPITI + "" +
"
(Note: PITI includes estimated Principal & Interest, Property Taxes, and Homeowner's Insurance. Estimates for taxes/insurance are approximate.)";
}