Determining how much house you can afford is a crucial step in the home-buying process. This calculator helps you estimate your potential mortgage affordability based on key financial factors.
Annual Household Income: This is the combined gross annual income of all borrowers. Lenders typically look at your gross income before taxes and deductions.
Total Monthly Debt Payments: This includes all your recurring monthly debt obligations such as car loans, student loans, credit card minimum payments, and any other loans. This figure does *not* include your current rent or the potential mortgage payment. Lenders use this to calculate your Debt-to-Income (DTI) ratio.
Down Payment Amount: This is the upfront cash you'll use towards the purchase price of the home. A larger down payment can reduce your loan amount and potentially your monthly payments and interest paid over time.
Estimated Annual Interest Rate: This is the percentage at which you'll be charged interest on your loan. It significantly impacts your monthly payment and the total cost of the loan. Current market rates and your creditworthiness will influence this.
Loan Term (in years): This is the length of time you have to repay the mortgage. Common terms are 15, 20, or 30 years. Shorter terms usually mean higher monthly payments but less interest paid overall.
How it Works:
This calculator uses a common guideline where lenders generally prefer your total housing expenses (including principal, interest, property taxes, and homeowner's insurance – often referred to as PITI) to be no more than 28% of your gross monthly income. Additionally, your total debt obligations (including the potential mortgage payment) should ideally not exceed 36% of your gross monthly income (this is known as the front-end and back-end DTI respectively).
The calculation estimates the maximum loan amount you can qualify for based on these DTI ratios, factoring in your down payment. Remember, this is an estimate. Your actual loan approval and the amount you can borrow will depend on the specific lender, your credit score, the property's appraised value, and other factors. It's always recommended to speak 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 annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Validate inputs
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(annualInterestRate) || isNaN(loanTermYears) ||
annualIncome <= 0 || monthlyDebt < 0 || downPayment < 0 || annualInterestRate < 0 || loanTermYears 0 && loanTermMonths > 0 && principalAndInterestPayment > 0) {
// Mortgage payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// We are solving for P (Principal/Loan Amount):
// P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var numerator = Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths);
maxLoanAmount = principalAndInterestPayment * (numerator / denominator);
} else if (principalAndInterestPayment > 0 && monthlyInterestRate === 0) {
// Handle case of 0% interest (though unrealistic for mortgages)
maxLoanAmount = principalAndInterestPayment * loanTermMonths;
}
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
// Display Results
resultDiv.innerHTML += "