How Do You Calculate Your Hourly Rate from Your Salary
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Mortgage Affordability Calculator
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the homebuying process. It's not just about the loan amount; it involves a comprehensive look at your income, existing debts, and the total costs associated with homeownership, including property taxes, homeowner's insurance, and potentially Private Mortgage Insurance (PMI).
Lenders typically use a debt-to-income (DTI) ratio to assess your ability to repay a mortgage. There are two main DTI ratios they consider:
Front-end ratio (or housing ratio): This measures the percentage of your gross monthly income that would go towards your mortgage payment (principal, interest, property taxes, and homeowner's insurance – often called PITI). Lenders generally prefer this to be no more than 28%.
Back-end ratio (or total debt ratio): This measures the percentage of your gross monthly income that would go towards all your monthly debt obligations, including your proposed mortgage payment, credit card payments, auto loans, student loans, and any other recurring debts. Lenders typically prefer this to be no more than 36%, though this can vary.
Our calculator helps you estimate your maximum affordable mortgage payment and, consequently, the potential price range for a home you might be able to purchase. It considers your annual income, existing monthly debts, down payment, interest rate, loan term, and estimated homeownership costs.
How the Calculation Works:
The calculator first determines your maximum allowable monthly housing payment based on common lender guidelines (often a percentage of your gross monthly income, adjusted for existing debts). It then works backward to estimate the loan amount you could qualify for with that monthly payment, factoring in property taxes, insurance, and PMI. Finally, it adds your down payment to estimate your maximum affordable home price.
Important Note: This calculator provides an estimate only. Lender approval depends on a variety of factors, including your credit score, employment history, and the specific underwriting guidelines of the lender. It's always best to speak with a mortgage professional for personalized advice.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var propertyTaxes = parseFloat(document.getElementById("propertyTaxes").value);
var homeInsurance = parseFloat(document.getElementById("homeInsurance").value);
var pmi = parseFloat(document.getElementById("pmi").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebt) || monthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(propertyTaxes) || propertyTaxes < 0 ||
isNaN(homeInsurance) || homeInsurance < 0 ||
isNaN(pmi) || pmi < 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Lender Guidelines (common ones, can be adjusted)
var maxFrontEndRatio = 0.28; // Max % of gross monthly income for PITI
var maxBackEndRatio = 0.36; // Max % of gross monthly income for all debts (PITI + other debts)
var grossMonthlyIncome = annualIncome / 12;
var maxAllowedHousingPayment = grossMonthlyIncome * maxBackEndRatio – monthlyDebt;
// Ensure housing payment doesn't exceed front-end ratio if it's the limiting factor
var maxAllowedFrontEndHousingPayment = grossMonthlyIncome * maxFrontEndRatio;
if (maxAllowedFrontEndHousingPayment < maxAllowedHousingPayment) {
maxAllowedHousingPayment = maxAllowedFrontEndHousingPayment;
}
if (maxAllowedHousingPayment <= 0) {
resultDiv.innerHTML = "Based on your income and existing debts, you may not qualify for a mortgage at this time.";
return;
}
var monthlyPropertyTaxes = propertyTaxes / 12;
var monthlyHomeInsurance = homeInsurance / 12;
var monthlyPMI = pmi / 12;
var monthlyPrincipalAndInterest = maxAllowedHousingPayment – monthlyPropertyTaxes – monthlyHomeInsurance – monthlyPMI;
if (monthlyPrincipalAndInterest 0 && numberOfPayments > 0) {
maxLoanAmount = monthlyPrincipalAndInterest * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else if (monthlyPrincipalAndInterest > 0) { // Handle 0% interest rate edge case
maxLoanAmount = monthlyPrincipalAndInterest * numberOfPayments;
}
var maxAffordableHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML = "