Use this calculator to estimate how much house you can afford based on your income, debts, and estimated mortgage costs. Remember, this is an estimate, and lenders will consider many other factors.
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.result-section {
margin-top: 25px;
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function calculateAffordability() {
var grossIncome = parseFloat(document.getElementById("grossIncome").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 propertyTaxRate = parseFloat(document.getElementById("propertyTaxRate").value);
var homeInsurance = parseFloat(document.getElementById("homeInsurance").value);
var pmiRate = parseFloat(document.getElementById("pmiRate").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// — Input Validation —
if (isNaN(grossIncome) || grossIncome <= 0 ||
isNaN(monthlyDebt) || monthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(propertyTaxRate) || propertyTaxRate < 0 ||
isNaN(homeInsurance) || homeInsurance < 0 ||
isNaN(pmiRate) || pmiRate < 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// — Calculations —
// 1. Maximum Monthly Payment (DTI – Debt-to-Income Ratio)
// Common guideline: Housing costs (PITI) should not exceed 28% of gross monthly income.
// And total debt (including PITI) should not exceed 36% of gross monthly income.
var grossMonthlyIncome = grossIncome / 12;
var maxHousingPayment = grossMonthlyIncome * 0.28; // Front-end DTI
var maxTotalDebtPayment = grossMonthlyIncome * 0.36; // Back-end DTI
var maxPitiPayment = Math.min(maxHousingPayment, maxTotalDebtPayment – monthlyDebt);
if (maxPitiPayment <= 0) {
resultDiv.innerHTML = "Based on your income and existing debts, your affordable mortgage payment is too low. Consider increasing income or reducing debt.";
return;
}
// 2. Estimate Monthly Property Taxes
var monthlyPropertyTax = (propertyTaxRate / 100) * (grossMonthlyIncome / 12) * 12 / 12; // Tax on estimated home value, simplified
// This is a simplification. Property tax is based on the *value of the house*, not income.
// A better approach would be to iterate or use a different model. For this calculator,
// we will use a common proxy where lenders estimate taxes based on income and loan amount.
// For a more accurate P&I calculation, we need an assumed loan amount.
// Let's try to estimate the maximum loan amount first, then refine.
// Let's use an iterative approach or a different perspective.
// Often lenders use affordability based on P&I first.
// A common formula for maximum P&I payment is:
// Max P&I = Max PITI – Monthly Taxes – Monthly Insurance – Monthly PMI
var monthlyInsurance = homeInsurance / 12;
// To estimate PMI, we need the loan amount, which we don't have yet.
// Let's assume PMI applies and estimate it based on a potential loan amount later.
// For now, let's focus on calculating the maximum *loan amount* possible.
// Formula for Monthly Mortgage Payment (P&I): M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where:
// M = Monthly Payment (what we want to find for P&I)
// P = Principal Loan Amount
// i = Monthly interest rate (Annual rate / 12 / 100)
// n = Total number of payments (Loan term in years * 12)
// We need to find P, given M, i, and n.
// Rearranging the formula to solve for P:
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
// We need to make an assumption about the loan amount to estimate PMI and property tax for PITI.
// Let's work backwards from max PITI.
// Max PITI = maxPitiPayment
// Max PITI = P&I + Monthly Taxes + Monthly Insurance + Monthly PMI
// — Iterative Approach to Find Maximum Loan Amount —
var maxLoanAmount = 0;
var lowerBound = 0;
var upperBound = grossIncome * 10; // A very generous upper bound for loan amount
var iterations = 0;
var maxIterations = 100; // Prevent infinite loops
while (iterations < maxIterations) {
var potentialLoanAmount = (lowerBound + upperBound) / 2;
if (potentialLoanAmount 0) {
estimatedMonthlyPMI = (pmiRate / 100) * potentialLoanAmount / 12;
}
var estimatedMonthlyPITI = maxPitiPayment;
var estimatedMonthlyPI = estimatedMonthlyPITI – estimatedMonthlyPropertyTax – monthlyInsurance – estimatedMonthlyPMI;
if (estimatedMonthlyPI 0 && numberOfPayments > 0) {
calculatedLoanAmount = estimatedMonthlyPI * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
}
if (calculatedLoanAmount >= potentialLoanAmount – 100) { // Close enough
maxLoanAmount = potentialLoanAmount;
lowerBound = potentialLoanAmount; // Try for a slightly higher loan
} else {
upperBound = potentialLoanAmount; // Loan amount is too high for this P&I
}
}
iterations++;
}
// Refine maxLoanAmount if initial iteration didn't converge well
if (maxLoanAmount === 0) {
// Fallback if iteration failed, estimate based on max P&I directly
var estimatedAnnualPropertyTax = (propertyTaxRate / 100) * (grossIncome * 0.5); // Guessing 50% of income as home value
var estimatedMonthlyPropertyTax = estimatedAnnualPropertyTax / 12;
var estimatedMonthlyPMI = (pmiRate / 100) * (grossIncome * 3) / 12; // Guessing 3x income as loan
var estimatedMonthlyPI_fallback = maxPitiPayment – estimatedMonthlyPropertyTax – monthlyInsurance – estimatedMonthlyPMI;
if (estimatedMonthlyPI_fallback > 0 && monthlyInterestRate > 0 && numberOfPayments > 0) {
maxLoanAmount = estimatedMonthlyPI_fallback * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
}
}
// Calculate final affordability
var totalAffordableHomePrice = maxLoanAmount + downPayment;
// — Display Results —
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedTotalAffordableHomePrice = totalAffordableHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = "Estimated Maximum Loan Amount: " + formattedMaxLoanAmount + "" +
"Estimated Total Affordable Home Price: " + formattedTotalAffordableHomePrice;
}
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial first step in the home-buying process. It's not just about what a lender will approve you for, but what you are comfortable paying each month without straining your finances. This calculator helps estimate your potential home affordability based on several key financial factors.
Key Factors in Affordability:
Gross Annual Income: This is your total income before taxes and other deductions. Lenders heavily rely on this figure to gauge your ability to repay a loan.
Total Monthly Debt Payments: This includes all your recurring monthly debt obligations, such as student loans, car payments, and credit card minimum payments. It does NOT include your potential mortgage payment yet.
Down Payment: The amount of cash you'll pay upfront towards the purchase price. A larger down payment reduces the loan amount needed and can lower your monthly payments and potential PMI costs.
Interest Rate: The annual interest rate on the mortgage loan. Even a small difference in interest rates can significantly impact your monthly payment and the total interest paid over the life of the loan.
Loan Term: The number of years you have to repay the mortgage (e.g., 15, 30 years). Shorter terms mean higher monthly payments but less interest paid overall.
Property Taxes: Annual taxes assessed by local government on your property's value. These are usually paid monthly as part of your PITI payment (Principal, Interest, Taxes, Insurance).
Homeowners Insurance: The cost of insuring your home against damage, theft, and liability. Also typically paid monthly as part of PITI.
PMI (Private Mortgage Insurance): If your down payment is less than 20% of the home's value, lenders usually require PMI. This protects the lender if you default on the loan. The cost varies based on your loan amount and creditworthiness.
How the Calculator Works:
This calculator uses common lending guidelines to estimate affordability. It first calculates the maximum monthly housing payment (PITI – Principal, Interest, Taxes, Insurance, and PMI) you can likely afford based on a debt-to-income (DTI) ratio. Lenders often look at two DTI ratios: the housing expense ratio (housing costs compared to income) and the total debt ratio (all debts compared to income). We use conservative estimates for these ratios.
Then, it works backward to estimate the maximum loan amount you could qualify for given that maximum monthly payment, interest rate, and loan term. Finally, it adds your specified down payment to this maximum loan amount to estimate the total affordable home price.
Important Considerations:
Lender Differences: This calculator provides an estimate. Actual loan approval depends on a lender's specific underwriting criteria, your credit score, employment history, assets, and more.
Closing Costs: Don't forget to budget for closing costs, which can add several thousand dollars to your upfront expenses.
Home Maintenance and Utilities: Factor in ongoing costs like utilities, repairs, and potential HOA fees, which are not included in this affordability calculation.
Interest Rate Fluctuations: Mortgage rates can change daily. The rate you secure when you lock it in will be the one used for your loan.
Use this tool as a starting point for your home-buying journey and consult with mortgage professionals for personalized advice.