.calculator-container {
font-family: sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #e0e0e0;
border-radius: 8px;
box-shadow: 0 2px 4px rgba(0,0,0,0.1);
}
.calculator-title {
text-align: center;
color: #333;
margin-bottom: 20px;
}
.calculator-inputs {
display: grid;
grid-template-columns: repeat(auto-fit, minmax(250px, 1fr));
gap: 15px;
margin-bottom: 20px;
}
.input-group {
display: flex;
flex-direction: column;
}
.input-group label {
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.input-group input[type="number"] {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 1rem;
}
.calculator-button {
display: block;
width: 100%;
padding: 12px 20px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 1.1rem;
cursor: pointer;
transition: background-color 0.3s ease;
}
.calculator-button:hover {
background-color: #0056b3;
}
.calculator-result {
margin-top: 20px;
padding: 15px;
background-color: #f8f9fa;
border: 1px solid #dee2e6;
border-radius: 4px;
text-align: center;
font-size: 1.1rem;
color: #333;
}
.calculator-result strong {
color: #28a745;
}
function calculateAffordability() {
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 loanTerm = parseInt(document.getElementById("loanTerm").value);
var targetLTV = parseFloat(document.getElementById("loanToValueRatio").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebtPayments) || monthlyDebtPayments < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(targetLTV) || targetLTV 100) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields. LTV must be between 1 and 100.";
return;
}
// — Affordability Calculation Logic —
// 1. Calculate Maximum Allowable Monthly Payment (from DTI ratios)
// Common DTI ratios:
// – Front-end DTI (Housing): typically 28% of gross monthly income
// – Back-end DTI (Total Debt): typically 36% of gross monthly income
var grossMonthlyIncome = annualIncome / 12;
var maxHousingPayment = grossMonthlyIncome * 0.28; // Front-end DTI
var maxTotalDebtPayment = grossMonthlyIncome * 0.36; // Back-end DTI
// Maximum monthly payment available for housing (principal, interest, taxes, insurance – PITI)
var allowedMonthlyHousingPayment = Math.min(maxHousingPayment, maxTotalDebtPayment – monthlyDebtPayments);
// Ensure the allowed payment is not negative
if (allowedMonthlyHousingPayment 0 && numberOfPayments > 0) {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
maxPrincipalLoanAmount = allowedMonthlyHousingPayment * (factor – 1) / monthlyInterestRate / factor;
} else if (allowedMonthlyHousingPayment > 0) { // Handle 0% interest rate case
maxPrincipalLoanAmount = allowedMonthlyHousingPayment * numberOfPayments;
}
// 3. Calculate Maximum Property Price based on Loan-to-Value (LTV)
// P = Price – Down Payment
// LTV = P / Price
// LTV = (Price – Down Payment) / Price
// LTV = 1 – (Down Payment / Price)
// Down Payment / Price = 1 – LTV
// Price = Down Payment / (1 – LTV)
var maxPropertyValue = 0;
if (targetLTV < 100) { // Avoid division by zero if LTV is 100%
var maxLoanAmountBasedOnLTV = (maxPropertyValue – downPayment) / (targetLTV / 100); // This is not right.
// var P = Max Property Value
// Max Loan Amount = P * (targetLTV / 100)
// We know Max Loan Amount cannot exceed maxPrincipalLoanAmount
// P * (targetLTV / 100) <= maxPrincipalLoanAmount
// P <= maxPrincipalLoanAmount / (targetLTV / 100)
// P <= maxPrincipalLoanAmount * (100 / targetLTV)
maxPropertyValue = maxPrincipalLoanAmount / (targetLTV / 100);
} else {
// If target LTV is 100%, the maximum property value is limited solely by the loan principal.
maxPropertyValue = maxPrincipalLoanAmount + downPayment;
}
// Final checks and display
var affordableLoanAmount = Math.max(0, maxPropertyValue * (targetLTV / 100));
resultDiv.innerHTML = "Based on your inputs:" +
"Gross Monthly Income: $" + grossMonthlyIncome.toFixed(2) + "" +
"Maximum Allowable Monthly Housing Payment (P&I, Taxes, Insurance): $" + allowedMonthlyHousingPayment.toFixed(2) + "" +
"Estimated Maximum Loan Amount you can afford: $" + affordableLoanAmount.toFixed(2) + "" +
"Estimated Maximum Home Purchase Price (at " + targetLTV + "% LTV): $" + maxPropertyValue.toFixed(2) + "";
}
Understanding Loan Affordability and How This Calculator Works
Determining how much home or property you can afford is a crucial step in the buying process. It's not just about what a lender *will* give you, but what you can comfortably manage each month without straining your finances. This Loan Affordability Calculator is designed to give you a realistic estimate based on key financial metrics.
Key Factors in Loan Affordability:
Annual Income: This is the primary driver of your borrowing capacity. Lenders look at your total income before taxes.
Existing Monthly Debt Payments: This includes credit card minimums, car loans, student loans, and any other recurring debt obligations. These significantly impact how much new debt you can take on.
Down Payment: A larger down payment reduces the amount you need to borrow, potentially lowering your monthly payments and the overall interest paid. It also affects the Loan-to-Value (LTV) ratio.
Interest Rate: Even small changes in interest rates can have a large impact on your monthly payments and the total cost of the loan over its term.
Loan Term: The length of the loan (e.g., 15 or 30 years) affects your monthly payment. Shorter terms usually mean higher monthly payments but less total interest paid.
Loan-to-Value (LTV) Ratio: This is the ratio of the loan amount to the appraised value of the property. Lenders often have limits on LTV, especially for lower down payments. A lower LTV generally means a lower risk for the lender and potentially better terms for you.
How the Calculator Estimates Affordability:
This calculator uses a common approach based on Debt-to-Income (DTI) ratios.
Gross Monthly Income Calculation: Your annual income is divided by 12 to find your gross monthly income.
Maximum Monthly Housing Payment: Lenders typically assess affordability using two DTI ratios:
Front-End DTI (Housing Ratio): Usually capped at around 28% of your gross monthly income. This covers your estimated monthly housing costs (Principal, Interest, Taxes, and Insurance – PITI).
Back-End DTI (Total Debt Ratio): Typically capped at around 36% of your gross monthly income. This includes your estimated PITI plus all your other monthly debt payments.
The calculator determines the maximum amount you can allocate to your monthly housing payment by considering both limits and your existing debts.
Maximum Loan Amount: Using the maximum allowed monthly housing payment and the specified interest rate and loan term, the calculator computes the maximum loan principal you could afford. It utilizes the standard mortgage payment formula rearranged to solve for the principal loan amount.
Maximum Property Price: Finally, based on your target Loan-to-Value (LTV) ratio, the calculator estimates the maximum property price you could purchase. If your target LTV is 90%, and your affordable loan amount is $360,000, this implies a maximum property value of $400,000 ($360,000 is 90% of $400,000).
Disclaimer: This calculator provides an estimate for informational purposes only. It does not constitute financial advice or a loan commitment. Actual loan approval and amounts depend on a lender's specific underwriting criteria, credit score, property appraisal, and other factors. Always consult with a qualified mortgage professional for personalized guidance.