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Mortgage Affordability Calculator

Use this calculator to estimate how much you might be able to borrow for a mortgage, based on your income, debts, and desired down payment.

Understanding Mortgage Affordability

Determining how much you can borrow for a mortgage is a crucial step in the home-buying process. Lenders typically use a debt-to-income (DTI) ratio to assess your ability to repay a loan. This calculator helps you estimate your potential borrowing capacity based on key financial factors.

Key Factors:

  • Annual Gross Income: This is your total income before taxes. Lenders will consider this as the primary source of repayment.
  • Total Monthly Debt Payments: This includes all your existing monthly financial obligations such as credit card minimum payments, student loan payments, car loan payments, and any other installment loans. It does NOT include your current rent or potential mortgage payment.
  • 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 and can improve your borrowing prospects.
  • Estimated Mortgage Interest Rate: This is the annual interest rate you expect to pay on the mortgage. Lower rates generally mean lower monthly payments, potentially allowing you to borrow more.
  • Loan Term (Years): The duration over which you will repay the mortgage. Common terms are 15, 20, or 30 years. Shorter terms result in higher monthly payments but less interest paid over time.

How the Calculation Works (Simplified):

Lenders often have guidelines for maximum DTI ratios. A common guideline is that your total monthly debt payments (including the potential new mortgage payment) should not exceed 43% of your gross monthly income. This calculator aims to estimate the maximum mortgage payment you could afford within such a guideline, factoring in your existing debts and income. It then uses a standard mortgage payment formula to estimate the principal loan amount you could borrow for that payment, given the interest rate and loan term.

Disclaimer: This calculator provides an estimation only and is not a loan approval or a guarantee of borrowing. Actual loan amounts and terms will depend on lender-specific criteria, credit score, property appraisal, and other factors.

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("mortgage-result"); resultDiv.innerHTML = "; // Clear previous results if (isNaN(annualIncome) || isNaN(monthlyDebtPayments) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTermYears) || annualIncome < 0 || monthlyDebtPayments < 0 || downPayment < 0 || interestRate < 0 || loanTermYears <= 0) { resultDiv.innerHTML = 'Please enter valid positive numbers for all fields.'; return; } // Assuming a maximum DTI ratio of 43% for total debt (including potential mortgage) var maxDtiRatio = 0.43; var monthlyIncome = annualIncome / 12; var maxTotalMonthlyDebt = monthlyIncome * maxDtiRatio; var maxMortgagePayment = maxTotalMonthlyDebt – monthlyDebtPayments; if (maxMortgagePayment 0) { // Formula for present value of an annuity (loan amount) maxLoanAmount = maxMortgagePayment * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate; } else { // If interest rate is 0, loan amount is simply monthly payment * number of payments maxLoanAmount = maxMortgagePayment * numberOfPayments; } // The total estimated home price affordability is the loan amount plus the down payment var estimatedHomePrice = maxLoanAmount + downPayment; resultDiv.innerHTML = 'Estimated Maximum Monthly Mortgage Payment (Principal & Interest): $' + maxMortgagePayment.toFixed(2) + " + 'Estimated Maximum Mortgage Loan Amount: $' + maxLoanAmount.toFixed(2) + " + 'Estimated Affordable Home Price: $' + estimatedHomePrice.toFixed(2) + " + 'This is an estimation based on a DTI of ' + (maxDtiRatio * 100) + '%. Actual affordability may vary.'; }

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