Use this calculator to estimate how much home you can afford based on your income, debts, and desired down payment. This tool provides an estimate and is not a guarantee of loan approval. Consult with a mortgage lender for precise figures.
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. It involves assessing your financial situation and understanding the various costs associated with homeownership.
Key Factors Influencing Affordability:
Income: Your gross annual income is the primary indicator of your borrowing capacity. Lenders often use debt-to-income ratios (DTI) to assess your ability to manage loan payments. A common guideline is that your total housing expenses (principal, interest, taxes, insurance – PITI) should not exceed 28% of your gross monthly income, and your total DTI (including all debts) should not exceed 36-43%.
Debts: Existing monthly debt payments (car loans, student loans, credit card minimums) reduce the amount of income available for a mortgage. High DTI ratios can make it difficult to qualify for a loan.
Down Payment: A larger down payment reduces the loan amount needed, lowers your monthly payments, and can help you avoid Private Mortgage Insurance (PMI).
Interest Rate: Even small differences in interest rates can significantly impact your monthly payment and the total interest paid over the life of the loan.
Loan Term: A longer loan term (e.g., 30 years vs. 15 years) results in lower monthly payments but more interest paid overall.
Additional Homeownership Costs: Beyond the mortgage payment itself, you must factor in property taxes, homeowner's insurance, and potentially PMI or Homeowners Association (HOA) dues. These are often included in your monthly PITI payment.
How the Calculator Works:
This calculator estimates your maximum affordable home price by working backward from your financial capacity. It considers your income, existing debts, and the estimated monthly costs of homeownership (mortgage principal & interest, property taxes, insurance, and PMI/HOA). It aims to find the mortgage amount you can support, which is then added to your down payment to estimate the maximum home price.
Disclaimer: This calculator provides an estimate for educational purposes only. Actual mortgage affordability can vary based on lender-specific underwriting criteria, credit score, loan programs, and market conditions. It is essential to get pre-approved by a mortgage lender to understand your true borrowing power.
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) / 100; // Convert percentage to decimal
var loanTerm = parseInt(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
// Basic validation
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) || isNaN(propertyTaxes) || isNaN(homeInsurance) || isNaN(pmi)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (annualIncome <= 0 || loanTerm <= 0 || interestRate < 0) {
resultDiv.innerHTML = "Income, Loan Term must be positive, and Interest Rate cannot be negative.";
return;
}
var monthlyIncome = annualIncome / 12;
var maxTotalMonthlyHousingCost = monthlyIncome * 0.36; // Assuming a 36% DTI for total debt, and housing is the main part. This is a simplified assumption.
var maxMortgagePayment = maxTotalMonthlyHousingCost – monthlyDebt;
if (maxMortgagePayment <= 0) {
resultDiv.innerHTML = "Based on your income and debts, you may not qualify for a mortgage payment at this time. Consider reducing debt or increasing income.";
return;
}
var monthlyPropertyTaxes = propertyTaxes / 12;
var monthlyHomeInsurance = homeInsurance / 12;
var monthlyPmi = pmi / 12;
var totalMonthlyNonPIMortgageCosts = monthlyPropertyTaxes + monthlyHomeInsurance + monthlyPmi;
var maxMonthlyPrincipalAndInterest = maxMortgagePayment – totalMonthlyNonPIMortgageCosts;
if (maxMonthlyPrincipalAndInterest 0 && numberOfPayments > 0) {
maxLoanAmount = maxMonthlyPrincipalAndInterest * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else if (monthlyInterestRate === 0 && numberOfPayments > 0) {
maxLoanAmount = maxMonthlyPrincipalAndInterest * numberOfPayments;
}
var maxHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML =
"