This calculator helps you estimate the maximum loan amount you can afford based on your income, existing debts, and desired monthly payment. Understanding your loan affordability is a crucial first step in the borrowing process, whether for a mortgage, car loan, or personal loan. It helps you set realistic expectations and avoid overextending your finances.
.calculator-container {
font-family: Arial, sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ddd;
border-radius: 8px;
box-shadow: 0 2px 4px rgba(0, 0, 0, 0.1);
}
.calculator-container h2 {
text-align: center;
margin-bottom: 15px;
color: #333;
}
.calculator-container p {
margin-bottom: 20px;
line-height: 1.6;
color: #555;
}
.input-section {
margin-bottom: 15px;
}
.input-section label {
display: block;
margin-bottom: 5px;
font-weight: bold;
color: #444;
}
.input-section input[type="number"] {
width: calc(100% – 22px);
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 16px;
}
button {
display: block;
width: 100%;
padding: 12px 20px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 16px;
cursor: pointer;
transition: background-color 0.3s ease;
}
button:hover {
background-color: #0056b3;
}
#result {
margin-top: 20px;
padding: 15px;
background-color: #e9ecef;
border: 1px solid #ced4da;
border-radius: 4px;
text-align: center;
font-size: 18px;
font-weight: bold;
color: #333;
}
function calculateLoanAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var existingDebtPayments = parseFloat(document.getElementById("existingDebtPayments").value);
var desiredMonthlyPayment = parseFloat(document.getElementById("desiredMonthlyPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermMonths = parseFloat(document.getElementById("loanTermMonths").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(monthlyIncome) || isNaN(existingDebtPayments) || isNaN(desiredMonthlyPayment) || isNaN(interestRate) || isNaN(loanTermMonths) ||
monthlyIncome <= 0 || existingDebtPayments < 0 || desiredMonthlyPayment <= 0 || interestRate < 0 || loanTermMonths <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Maximum monthly payment based on income (e.g., debt-to-income ratio)
// A common guideline is to keep total debt payments below 36%-43% of gross monthly income.
// We'll use 43% for this example as a maximum for ALL debt payments, including the new loan.
var maxTotalDebtPayment = monthlyIncome * 0.43;
var affordableNewLoanPayment = maxTotalDebtPayment – existingDebtPayments;
if (affordableNewLoanPayment <= 0) {
resultDiv.innerHTML = "Based on your income and existing debts, you may not be able to afford additional loan payments.";
return;
}
// Ensure the desired monthly payment does not exceed what's affordable based on DTI
var actualMonthlyPayment = Math.min(desiredMonthlyPayment, affordableNewLoanPayment);
// Calculate maximum loan amount using the loan payment formula:
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where:
// M = Monthly Payment
// P = Principal Loan Amount (what we want to find)
// i = monthly interest rate
// n = number of months
// Rearranging to solve for P:
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var monthlyInterestRate = interestRate / 100 / 12;
if (monthlyInterestRate === 0) { // Handle zero interest rate case
var maxLoanAmount = actualMonthlyPayment * loanTermMonths;
} else {
var numerator = Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths);
var maxLoanAmount = actualMonthlyPayment * (numerator / denominator);
}
// Format the result for better readability
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
var message = "Based on your inputs, the estimated maximum loan amount you could afford is: " + formattedMaxLoanAmount + ".";
message += "This calculation considers a maximum total debt payment of 43% of your estimated monthly income.";
resultDiv.innerHTML = message;
}