How to Calculate Average Tax Rate and Marginal Tax Rate
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Mortgage Affordability Calculator
Understanding how much house you can afford is a crucial first step in the home-buying process. Our Mortgage Affordability Calculator helps you estimate the maximum mortgage loan you might qualify for, taking into account your income, debts, and desired down payment. This tool provides a starting point for your home search, allowing you to focus on properties within your realistic budget.
The affordability is primarily determined by your Debt-to-Income (DTI) ratio. Lenders typically look at two DTI ratios: a front-end ratio (housing expenses only) and a back-end ratio (all monthly debt obligations). While specific lender requirements vary, a common guideline is to keep your total monthly debt payments, including the potential mortgage, below 43% of your gross monthly income.
To use the calculator, input your gross monthly income, your total monthly debt payments (excluding the potential mortgage payment), and the percentage of the home price you plan to pay as a down payment. The calculator will then estimate your maximum affordable mortgage amount based on these figures and common lending standards.
Mortgage Affordability Calculator
function calculateAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var totalMonthlyDebt = parseFloat(document.getElementById("totalMonthlyDebt").value);
var downPaymentPercentage = parseFloat(document.getElementById("downPaymentPercentage").value);
var estimatedInterestRate = parseFloat(document.getElementById("estimatedInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(grossMonthlyIncome) || grossMonthlyIncome <= 0) {
resultDiv.innerHTML = "Please enter a valid gross monthly income.";
return;
}
if (isNaN(totalMonthlyDebt) || totalMonthlyDebt < 0) {
resultDiv.innerHTML = "Please enter valid total monthly debt payments.";
return;
}
if (isNaN(downPaymentPercentage) || downPaymentPercentage 100) {
resultDiv.innerHTML = "Please enter a valid down payment percentage between 0 and 100.";
return;
}
if (isNaN(estimatedInterestRate) || estimatedInterestRate <= 0) {
resultDiv.innerHTML = "Please enter a valid estimated annual interest rate.";
return;
}
if (isNaN(loanTermYears) || loanTermYears <= 0) {
resultDiv.innerHTML = "Please enter a valid loan term in years.";
return;
}
// — Affordability Calculation Logic —
// A common DTI ratio used by lenders is 43% for total debt obligations.
// We'll use this as a baseline for maximum allowed monthly payment.
var maxTotalMonthlyPaymentAllowed = grossMonthlyIncome * 0.43;
// Subtract existing monthly debts to find the maximum allowable PITI (Principal, Interest, Taxes, Insurance)
var maxPITI = maxTotalMonthlyPaymentAllowed – totalMonthlyDebt;
if (maxPITI 0) {
maxLoanAmount = maxPITI * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
maxLoanAmount = maxPITI * numberOfPayments;
}
// The down payment percentage allows us to estimate the maximum home price.
// If down payment is 20%, maxLoanAmount is 80% of the home price.
// Home Price = Loan Amount / (1 – Down Payment Percentage / 100)
var maxHomePrice = 0;
if (downPaymentPercentage < 100) {
maxHomePrice = maxLoanAmount / ((100 – downPaymentPercentage) / 100);
} else {
// If 100% down payment is intended, the max home price is simply the max loan amount (which is 0 in this context as PITI is the constraint)
// This edge case implies the user might be thinking of paying cash, but the calculator is for mortgage affordability.
maxHomePrice = maxLoanAmount; // If 100% down, affordability is 0 mortgage.
}
// Display the results
resultDiv.innerHTML = "
Estimated Affordability:
";
resultDiv.innerHTML += "Maximum Monthly PITI (Principal, Interest, Taxes, Insurance): $" + maxPITI.toFixed(2) + "";
resultDiv.innerHTML += "Estimated Maximum Mortgage Loan Amount: $" + maxLoanAmount.toFixed(2) + "";
resultDiv.innerHTML += "Estimated Maximum Affordable Home Price (with " + downPaymentPercentage + "% down payment): $" + maxHomePrice.toFixed(2) + "";
resultDiv.innerHTML += "Note: This is an estimate. Actual mortgage approval depends on lender criteria, credit score, property taxes, homeowner's insurance, and other factors.";
}