Mortgage Affordability Calculator
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process.
This mortgage affordability calculator helps you estimate your maximum loan amount and
potential monthly mortgage payment based on your financial situation. It considers your
monthly income, existing debt obligations, down payment, and the prevailing interest rates
and loan terms.
Key Factors:
- Monthly Gross Income: This is your total income before taxes and other deductions. Lenders often use a debt-to-income (DTI) ratio to assess your ability to manage monthly payments. A common guideline is that your total housing expenses (principal, interest, taxes, insurance, and potentially HOA fees) should not exceed 28% of your gross monthly income, and your total debt obligations (including housing) should not exceed 36%.
- Total Monthly Debt Payments: This includes all your recurring monthly debts such as car loans, student loans, credit card minimum payments, and personal loans. These are subtracted from your income to determine how much is available for a mortgage.
- Down Payment: The upfront amount you pay towards the purchase price. A larger down payment reduces the loan amount needed, lowers your monthly payments, and can help you avoid private mortgage insurance (PMI).
- Interest Rate: The annual percentage rate charged on the loan. Even small variations in interest rates can significantly impact your monthly payment and the total interest paid over the life of the loan.
- Loan Term: The length of time you have to repay the loan, typically 15 or 30 years. A shorter loan term results in higher monthly payments but less total interest paid. A longer term means lower monthly payments but more interest over time.
This calculator provides an estimate. It's essential to get pre-approved by a lender for a precise understanding of your borrowing capacity and to discuss your specific financial circumstances with a mortgage professional.
function calculateAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var existingDebts = parseFloat(document.getElementById("existingDebts").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");
if (isNaN(monthlyIncome) || isNaN(existingDebts) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// DTI ratios are common benchmarks. We'll use a common 28/36 rule for affordability estimation.
// Max housing payment (PITI) = 28% of gross monthly income
var maxHousingPayment = monthlyIncome * 0.28;
// Total debt payment = Max housing payment + existing debts
// However, lenders consider total debt obligations (housing + other debts) to be around 36% of gross monthly income.
// We will calculate the maximum *allowable* total debt first.
var maxTotalDebt = monthlyIncome * 0.36;
// Maximum monthly mortgage payment (principal & interest only, excluding taxes, insurance, PMI)
// is maxTotalDebt minus existing debts.
var maxMortgagePayment = maxTotalDebt – existingDebts;
if (maxMortgagePayment 0 && numberOfPayments > 0) {
maxLoanAmount = maxMortgagePayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else if (monthlyInterestRate === 0 && numberOfPayments > 0) {
// Handle 0% interest rate case
maxLoanAmount = maxMortgagePayment * numberOfPayments;
}
var affordableHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML = "
Your Estimated Affordability
Estimated Maximum Monthly Mortgage Payment (P&I): $" + maxMortgagePayment.toFixed(2) + "
Estimated Maximum Loan Amount: $" + maxLoanAmount.toFixed(2) + "
Estimated Affordable Home Price (with your down payment): $" + affordableHomePrice.toFixed(2) + "
Note: This is an estimate. Your actual affordability will depend on lender-specific underwriting, credit score, property taxes, homeowner's insurance, PMI (if applicable), and other closing costs.
";
}
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