Mortgage Affordability Calculator
.calculator-container {
font-family: sans-serif;
border: 1px solid #ccc;
padding: 20px;
border-radius: 8px;
max-width: 600px;
margin: 20px auto;
background-color: #f9f9f9;
}
.calculator-container h2 {
text-align: center;
margin-bottom: 20px;
color: #333;
}
.input-group {
margin-bottom: 15px;
display: flex;
flex-direction: column;
}
.input-group label {
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.input-group input {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 16px;
}
.calculator-container button {
display: block;
width: 100%;
padding: 12px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 18px;
cursor: pointer;
transition: background-color 0.3s ease;
}
.calculator-container button:hover {
background-color: #0056b3;
}
#result {
margin-top: 20px;
padding: 15px;
background-color: #e9ecef;
border: 1px solid #dee2e6;
border-radius: 4px;
text-align: center;
font-size: 18px;
color: #333;
min-height: 50px; /* Ensures space for results */
}
#result p {
margin: 5px 0;
}
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var currentDebts = parseFloat(document.getElementById("currentDebts").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(downPayment) || isNaN(currentDebts) || isNaN(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (annualIncome <= 0 || downPayment < 0 || currentDebts < 0 || interestRate <= 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter positive values for income, interest rate, and loan term, and a non-negative value for down payment and debts.";
return;
}
// — Affordability Rules of Thumb —
// Rule 1: Front-End Ratio (Housing Payment to Income) – Typically max 28%
var maxMonthlyHousingPayment = annualIncome * 0.28 / 12;
// Rule 2: Back-End Ratio (Total Debt to Income) – Typically max 36%
var totalMonthlyDebtAllowed = annualIncome * 0.36 / 12;
var maxTotalMonthlyPayment = totalMonthlyDebtAllowed;
// Calculate maximum PITI (Principal, Interest, Taxes, Insurance) that can be afforded
// We'll estimate PITI by assuming taxes and insurance are a portion of the loan value,
// but for a direct affordability calculation based on income and debt, we focus on the
// maximum monthly payment that fits the back-end ratio.
// We'll use the back-end ratio as the primary constraint for affordability.
var maxMonthlyMortgagePayment = maxTotalMonthlyPayment – currentDebts;
if (maxMonthlyMortgagePayment 0 && numberOfPayments > 0) {
var numerator = monthlyInterestRate * Math.pow((1 + monthlyInterestRate), numberOfPayments);
var denominator = Math.pow((1 + monthlyInterestRate), numberOfPayments) – 1;
var paymentFactor = numerator / denominator;
maxLoanAmount = maxMonthlyMortgagePayment / paymentFactor;
} else if (maxMonthlyMortgagePayment > 0) {
// Handle cases with 0% interest or 0 term (though usually invalid inputs)
maxLoanAmount = maxMonthlyMortgagePayment * numberOfPayments; // Simplified for 0 interest
}
// — Calculate Maximum Home Price —
var maxHomePrice = maxLoanAmount + downPayment;
// — Display Results —
var outputHTML = "Based on your inputs:";
outputHTML += "
Maximum Affordable Monthly Mortgage Payment (PITI Estimate): $" + maxMonthlyMortgagePayment.toFixed(2) + "";
outputHTML += "
Maximum Loan Amount You Can Afford: $" + maxLoanAmount.toFixed(2) + "";
outputHTML += "
Estimated Maximum Home Purchase Price: $" + maxHomePrice.toFixed(2) + "";
// Additional insights
outputHTML += "
Note: This is an estimate based on common affordability ratios (28% front-end, 36% back-end). Actual loan approval depends on lender policies, credit score, property taxes, homeowner's insurance, HOA fees, and other factors.";
resultDiv.innerHTML = outputHTML;
}
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. Mortgage affordability calculators help estimate the maximum loan amount and home price you might qualify for, based on your financial situation and current market conditions.
Key Factors Influencing Affordability:
- Annual Household Income: Lenders look at your gross (before tax) income to gauge your ability to repay a loan. Higher income generally means higher borrowing capacity.
- Down Payment: The amount you pay upfront for the house. A larger down payment reduces the loan amount needed, lowers your monthly payments, and can potentially get you better interest rates. It also impacts your loan-to-value (LTV) ratio.
- Monthly Debt Payments: This includes all recurring monthly obligations like student loans, car payments, credit card minimums, and personal loans. Lenders use these to calculate your debt-to-income (DTI) ratio.
- Interest Rate: The percentage charged by the lender on the loan amount. Even a small difference in interest rate can significantly impact your monthly payment and the total interest paid over the life of the loan.
- Loan Term: The duration over which you agree to repay the loan, typically 15 or 30 years. Shorter terms result in higher monthly payments but less interest paid overall. Longer terms have lower monthly payments but more interest paid.
How Affordability is Calculated (The Rules of Thumb):
Lenders typically use two main ratios to assess your borrowing capacity:
- Front-End Ratio (Housing Ratio): This ratio compares your potential total housing payment (Principal, Interest, Taxes, and Insurance – PITI) to your gross monthly income. A common guideline is that your PITI should not exceed 28% of your gross monthly income.
- Back-End Ratio (Debt Ratio): This ratio compares your total monthly debt obligations (including the potential mortgage payment) to your gross monthly income. A common guideline is that your total debt payments should not exceed 36% of your gross monthly income.
Our calculator uses these ratios to estimate your maximum affordable monthly mortgage payment and, consequently, the maximum loan amount and home price you might be able to afford. It's important to remember that these are guidelines, and actual lender approvals depend on many factors, including your credit score, employment history, and the specific property.
Example Scenario:
Let's consider a household with an annual income of $90,000. They have saved a down payment of $25,000 and have monthly debt payments (car loan, credit cards) totaling $400. They are looking at a mortgage with an estimated interest rate of 6.8% over a 30-year term.
- Maximum Affordable Monthly Mortgage Payment (Estimated PITI): Based on a 36% back-end ratio ($90,000 annual income / 12 months = $7,500 monthly income; $7,500 * 0.36 = $2,700 total debt allowance). Subtracting existing debts ($2,700 – $400) leaves approximately $2,300 for the total housing payment.
- Maximum Loan Amount: With a maximum monthly payment of $2,300, a 6.8% interest rate, and a 30-year term, the estimated maximum loan amount is around $350,000.
- Estimated Maximum Home Purchase Price: Adding the down payment ($350,000 loan + $25,000 down payment) suggests a maximum affordable home price of approximately $375,000.
This example illustrates how income, existing debts, and loan terms collectively influence how much home you can potentially buy.