Use this calculator to estimate how much home you can afford based on your income, debts, and desired mortgage terms.
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. It involves looking beyond just the sticker price and considering your overall financial picture, including your income, existing debts, and the ongoing costs associated with homeownership.
Key Factors in Affordability:
Gross Income: This is your total income before taxes and deductions. Lenders use this to assess your capacity to repay a loan. A common guideline is that your total housing costs (mortgage principal and interest, property taxes, homeowner's insurance, and potentially PMI) should not exceed 28% of your gross monthly income (the "front-end ratio").
Existing Debt Payments: This includes car loans, student loans, credit card minimum payments, and other recurring debts. Lenders will look at your "back-end ratio" or "debt-to-income ratio," which compares your total monthly debt payments (including the estimated housing costs) to your gross monthly income. This ratio typically should not exceed 36% to 43%, depending on the lender and loan type.
Down Payment: The larger your down payment, the less you need to borrow, which reduces your monthly payments and the total interest paid over the life of the loan. A larger down payment can also help you avoid Private Mortgage Insurance (PMI).
Interest Rate: A lower interest rate means lower monthly payments and less interest paid over time. Even a small difference in the interest rate can significantly impact your affordability.
Loan Term: Mortgages are typically offered in terms of 15, 20, or 30 years. Shorter terms result in higher monthly payments but less total interest paid. Longer terms have lower monthly payments but more total interest.
Property Taxes & Homeowner's Insurance: These are essential costs of homeownership that are often paid monthly as part of your mortgage payment (escrow). They vary significantly by location and the value of the home.
Private Mortgage Insurance (PMI): If you put down less than 20% on a conventional loan, you'll likely have to pay PMI, an additional monthly cost that protects the lender.
How the Calculator Works:
This calculator estimates your maximum affordable home price by working backward from your income and debts. It first determines your maximum allowable monthly housing payment based on the 28% front-end ratio guideline. Then, it subtracts your existing monthly debt payments and estimates of monthly property taxes, homeowner's insurance, and PMI (if applicable) from this maximum housing payment. The remaining amount is what's available for your mortgage principal and interest (P&I) payment. Finally, using the provided interest rate and loan term, it calculates the maximum mortgage amount you can afford with that P&I payment. Adding your down payment to this mortgage amount gives you an estimate of the maximum home price you can likely afford.
Disclaimer: This calculator provides an estimate for informational purposes only and does not constitute financial advice. Consult with a mortgage professional for personalized guidance.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var propertyTaxesAnnual = parseFloat(document.getElementById("propertyTaxesAnnual").value);
var homeInsuranceAnnual = parseFloat(document.getElementById("homeInsuranceAnnual").value);
var pmiPercentage = parseFloat(document.getElementById("pmiPercentage").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebtPayments) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTermYears) || isNaN(propertyTaxesAnnual) || isNaN(homeInsuranceAnnual) || isNaN(pmiPercentage)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// Calculate maximum allowable monthly housing cost (28% of gross monthly income)
var grossMonthlyIncome = annualIncome / 12;
var maxHousingCost = grossMonthlyIncome * 0.28;
// Calculate estimated monthly costs
var monthlyPropertyTaxes = propertyTaxesAnnual / 12;
var monthlyHomeInsurance = homeInsuranceAnnual / 12;
var monthlyPmi = (pmiPercentage / 100) * (grossMonthlyIncome * 0.9); // PMI is usually on 90% of loan value, but using gross income as a proxy here for simplicity in this estimator. A more precise calculation would need an estimated loan amount first. For this estimator, let's assume it's a percentage of the gross income if PMI is applicable.
if (downPayment >= 0.20 * (1000000)) { // A simplified threshold assuming a max home value of 1M for PMI calculation. A more robust approach is needed for real-world scenarios. Let's calculate based on potential loan amount to be more accurate.
// Recalculate PMI based on a potential loan amount. This is iterative.
// For simplicity in this example, let's use a simplified PMI calculation if down payment is less than 20%.
// A more accurate calculation requires knowing the potential loan amount first.
// Let's estimate PMI based on a percentage of the estimated affordable *loan amount* not gross income.
// This is a tricky part of an estimator as it's circular.
// For this simplified estimator, let's calculate it based on a *potential* loan amount derived from estimated affordability.
// However, the PMI percentage is often applied to the loan balance.
// Let's use a simplified approach: If down payment < 20%, apply PMI based on gross income.
var estimatedLoanAmountForPmiCalc = (grossMonthlyIncome * 12) * 0.36 – monthlyDebtPayments – monthlyPropertyTaxes – monthlyHomeInsurance; // Rough estimate of loan amount
if (estimatedLoanAmountForPmiCalc < 0) estimatedLoanAmountForPmiCalc = 0;
if (downPayment < 0.20 * estimatedLoanAmountForPmiCalc) { // Check if down payment is less than 20% of estimated loan
monthlyPmi = (pmiPercentage / 100) * (estimatedLoanAmountForPmiCalc * 0.9); // 90% of loan value for PMI
if (monthlyPmi 0 && downPayment 0) {
monthlyPmi = (pmiPercentage / 100) * (maxLoanEstimate); // Using maxLoanEstimate for PMI calculation if down payment < 20%
} else {
monthlyPmi = 0;
}
} else {
monthlyPmi = 0;
}
// Re-evaluate PMI: A more common way is PMI is on the *loan amount*. If down payment is < 20%, PMI is usually required. Let's assume PMI is required if downPayment 0 && downPayment < 0.20 * (estimatedAffordableHomePrice || 1000000)) { // Crude check if PMI might be needed, using a placeholder for estimatedAffordableHomePrice if it doesn't exist yet.
// Calculate PMI based on a potential loan amount derived from current PITI estimate.
// The loan amount for PMI is typically the home price minus down payment.
// Let's assume the potential loan amount is derived from the P&I portion.
// If estimatedMonthlyPitiExcludingPmi is negative, it means even without P&I, debt exceeds income.
if (estimatedMonthlyPitiExcludingPmi < 0) {
maxMonthlyPAndI = 0;
estimatedAffordableLoanAmount = 0;
affordableHomePrice = downPayment;
monthlyPmiActual = 0;
break; // Exit loop if debt exceeds income
}
// Use the M/I formula to find the loan amount that can be supported by maxMonthlyPAndI
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var monthlyInterestRate = interestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
if (monthlyInterestRate === 0) { // Handle zero interest rate
maxMonthlyPAndI = estimatedMonthlyPitiExcludingPmi;
estimatedAffordableLoanAmount = maxMonthlyPAndI * numberOfPayments;
} else {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
var maxLoanBasedOnPAndI = estimatedMonthlyPitiExcludingPmi * (factor – 1) / (monthlyInterestRate * factor);
estimatedAffordableLoanAmount = maxLoanBasedOnPAndI;
}
var potentialHomePrice = estimatedAffordableLoanAmount + downPayment;
// Recalculate PMI based on this potential home price if down payment < 20%
if (downPayment < 0.20 * potentialHomePrice) {
monthlyPmiActual = (pmiPercentage / 100) * (estimatedAffordableLoanAmount); // PMI is on the loan amount
if (monthlyPmiActual < 0) monthlyPmiActual = 0;
} else {
monthlyPmiActual = 0;
}
// Now, recalculate PITI available for Principal & Interest
var adjustedMonthlyPiti = maxHousingCost – monthlyDebtPayments – monthlyPropertyTaxes – monthlyHomeInsurance – monthlyPmiActual;
if (adjustedMonthlyPiti < 0) { // If even after accounting for PMI, affordability is negative
maxMonthlyPAndI = 0;
estimatedAffordableLoanAmount = 0;
affordableHomePrice = downPayment;
monthlyPmiActual = 0; // Reset PMI as affordability is 0
break;
}
// Calculate the loan amount based on the adjusted P&I
if (monthlyInterestRate === 0) {
maxMonthlyPAndI = adjustedMonthlyPiti;
estimatedAffordableLoanAmount = maxMonthlyPAndI * numberOfPayments;
} else {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
maxMonthlyPAndI = adjustedMonthlyPiti; // This is the available P&I
estimatedAffordableLoanAmount = maxMonthlyPAndI * (factor – 1) / (monthlyInterestRate * factor);
}
affordableHomePrice = estimatedAffordableLoanAmount + downPayment;
} else { // No PMI or down payment is 20% or more
monthlyPmiActual = 0;
if (estimatedMonthlyPitiExcludingPmi < 0) {
maxMonthlyPAndI = 0;
estimatedAffordableLoanAmount = 0;
affordableHomePrice = downPayment;
break;
}
var monthlyInterestRate = interestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
if (monthlyInterestRate === 0) {
maxMonthlyPAndI = estimatedMonthlyPitiExcludingPmi;
estimatedAffordableLoanAmount = maxMonthlyPAndI * numberOfPayments;
} else {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
maxMonthlyPAndI = estimatedMonthlyPitiExcludingPmi; // This is the available P&I
estimatedAffordableLoanAmount = maxMonthlyPAndI * (factor – 1) / (monthlyInterestRate * factor);
}
affordableHomePrice = estimatedAffordableLoanAmount + downPayment;
}
// For the next iteration's PMI check, we'll use the newly calculated affordableHomePrice
if (currentIteration === maxIterations) {
// If we reached max iterations, use the last calculated values.
break;
}
} while (currentIteration <= maxIterations); // Continue if PMI calculation needs refinement.
// Final check for negative values
if (affordableHomePrice < downPayment) affordableHomePrice = downPayment;
if (estimatedAffordableLoanAmount < 0) estimatedAffordableLoanAmount = 0;
resultDiv.innerHTML = `
Estimated Maximum Affordable Home Price:$${affordableHomePrice.toLocaleString(undefined, { minimumFractionDigits: 0, maximumFractionDigits: 0 })}Estimated Maximum Loan Amount:$${estimatedAffordableLoanAmount.toLocaleString(undefined, { minimumFractionDigits: 0, maximumFractionDigits: 0 })}(Based on a 28% front-end debt-to-income ratio, estimated monthly property taxes, homeowner's insurance, and PMI if applicable.)
`;
}
.calculator-container {
font-family: Arial, sans-serif;
max-width: 800px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ddd;
border-radius: 8px;
background-color: #f9f9f9;
}
.calculator-container h2 {
text-align: center;
color: #333;
margin-bottom: 15px;
}
.calculator-container p {
text-align: center;
color: #555;
margin-bottom: 25px;
}
.calculator-inputs {
display: grid;
grid-template-columns: repeat(auto-fit, minmax(250px, 1fr));
gap: 15px;
margin-bottom: 20px;
}
.input-group {
display: flex;
flex-direction: column;
}
.input-group label {
margin-bottom: 5px;
font-weight: bold;
color: #444;
}
.input-group input {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 1em;
}
.calculator-container button {
display: block;
width: 100%;
padding: 12px 20px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 1.1em;
cursor: pointer;
transition: background-color 0.3s ease;
margin-bottom: 20px;
}
.calculator-container button:hover {
background-color: #0056b3;
}
.calculator-result {
background-color: #e7f3ff;
padding: 15px;
border: 1px solid #cce5ff;
border-radius: 4px;
text-align: center;
font-size: 1.2em;
margin-top: 20px;
}
.calculator-result .highlight {
font-weight: bold;
color: #0056b3;
}
.calculator-explanation {
margin-top: 30px;
padding-top: 20px;
border-top: 1px solid #eee;
color: #333;
font-size: 0.95em;
line-height: 1.6;
}
.calculator-explanation h3,
.calculator-explanation h4 {
color: #333;
margin-top: 15px;
margin-bottom: 10px;
}
.calculator-explanation ul {
padding-left: 20px;
}
.calculator-explanation li {
margin-bottom: 8px;
}