Buying a home is one of the biggest financial decisions you'll ever make. Determining how much mortgage you can comfortably afford is crucial to avoid financial strain. This calculator helps you estimate your potential borrowing capacity based on your income, existing debts, down payment, and loan terms.
Key Factors in Mortgage Affordability:
Annual Household Income: This is the primary driver of your borrowing power. Lenders look at your total income to assess your ability to repay the loan.
Total Monthly Debt Payments: Your existing monthly obligations (like car loans, student loans, credit card minimum payments) reduce the amount of income available for a mortgage payment. Lenders often use a debt-to-income (DTI) ratio to assess risk. A common guideline is to keep your total DTI below 43%.
Down Payment: A larger down payment reduces the loan amount needed, making the mortgage more affordable and potentially lowering your interest rate and private mortgage insurance (PMI) costs.
Interest Rate: Even small changes in interest rates can significantly impact your monthly payment and the total interest paid over the life of the loan.
Loan Term: A shorter loan term means higher monthly payments but less interest paid overall. A longer term results in lower monthly payments but more interest paid over time.
How the Calculator Works:
This calculator uses common lending guidelines to estimate your maximum affordable monthly mortgage payment. It considers your income and existing debts to determine how much you can allocate towards a new mortgage. It then calculates the maximum loan amount you could qualify for based on the provided interest rate and loan term.
Disclaimer: This calculator provides an estimation for informational purposes only and does not constitute a loan offer or financial advice. Your actual borrowing capacity may vary based on lender-specific criteria, credit score, property taxes, homeowners insurance, and other factors. It's always recommended to consult 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 resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) ||
annualIncome <= 0 || monthlyDebt < 0 || downPayment < 0 || interestRate <= 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Conservative DTI ratio assumption (e.g., 36% for PITI, 28% for principal and interest)
// This is a simplified model. Lenders use more complex criteria.
var maxTotalDTI = 0.43; // Maximum allowed Debt-to-Income ratio
var maxPITI = annualIncome * (maxTotalDTI / 12); // Max PITI payment allowed monthly
// Estimate property taxes and homeowner's insurance as a percentage of home price.
// This is a rough estimate and varies greatly by location.
var annualTaxesAndInsuranceRate = 0.012; // 1.2% of home value annually
var monthlyTaxesAndInsurance = (annualIncome * 0.28) * (annualTaxesAndInsuranceRate / 12); // Very rough estimate based on P&I portion
var availableForPAndI = maxPITI – monthlyDebt;
if (availableForPAndI 0) {
maxLoanAmount = principalAndInterestPayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else { // Handle 0% interest rate case
maxLoanAmount = principalAndInterestPayment * numberOfPayments;
}
// The calculator is designed to show affordability based on income and debt, not to calculate a specific home price.
// However, we can show the *maximum loan amount* someone could potentially afford.
var affordabilityMessage = "Based on your inputs, you may be able to afford a mortgage with an estimated maximum loan amount of:";
affordabilityMessage += "