This calculator helps you estimate the maximum mortgage loan you can afford based on your income, debts, and desired monthly payment. Understanding your affordability is a crucial first step in the home-buying process.
How Mortgage Affordability is Calculated
Lenders typically use debt-to-income (DTI) ratios to determine how much they are willing to lend you. There are generally two DTI ratios considered:
Front-end DTI (Housing Ratio): This measures your potential housing costs (principal, interest, taxes, and insurance – PITI) against your gross monthly income. Lenders often prefer this to be no more than 28%.
Back-end DTI (Total Debt Ratio): This measures all your monthly debt obligations (including your potential mortgage payment, credit cards, car loans, student loans, etc.) against your gross monthly income. Lenders often prefer this to be no more than 36% to 43%, depending on the loan type and your creditworthiness.
This calculator focuses on estimating the maximum loan amount based on a common back-end DTI guideline (assuming a 36% DTI limit for total debt, including the new mortgage). It also factors in your down payment to give you a more realistic picture of the total home price you might be able to afford.
Formula Used (Simplified):
Calculate Gross Monthly Income: Annual Income / 12
Determine Maximum Allowable Monthly Debt Payment: Gross Monthly Income * 0.36 (assuming 36% DTI)
Calculate Maximum Mortgage Payment: Maximum Allowable Monthly Debt Payment – Existing Monthly Debt Payments
Calculate Maximum Loan Amount: This involves a mortgage payment formula, working backward to find the principal loan amount (P) given the monthly payment (M), interest rate (r), and loan term (n). The formula for M is: M = P [ r(1 + r)^n ] / [ (1 + r)^n – 1]. Rearranging this to solve for P is complex, so we use iterative calculations or financial functions in JavaScript to find P.
Estimated Maximum Home Price: Maximum Loan Amount + Down Payment
Note: This is an estimate. Actual loan approval depends on many factors, including your credit score, lender policies, and specific loan programs. It's always best to consult with a mortgage lender for a pre-approval.
.calculator-container {
font-family: sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 8px;
background-color: #f9f9f9;
}
.calculator-container h2 {
text-align: center;
margin-bottom: 20px;
color: #333;
}
.calculator-inputs {
display: grid;
grid-template-columns: repeat(2, 1fr);
gap: 15px;
margin-bottom: 20px;
}
.input-group {
display: flex;
flex-direction: column;
}
.input-group label {
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.input-group input[type="number"] {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 1rem;
}
.calculator-container button {
display: block;
width: 100%;
padding: 12px 20px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 1.1rem;
cursor: pointer;
transition: background-color 0.3s ease;
margin-top: 10px;
}
.calculator-container button:hover {
background-color: #0056b3;
}
.calculator-result {
margin-top: 25px;
padding: 15px;
background-color: #e9ecef;
border: 1px solid #ced4da;
border-radius: 4px;
font-size: 1.1rem;
text-align: center;
min-height: 50px;
display: flex;
align-items: center;
justify-content: center;
flex-wrap: wrap;
color: #333;
}
.calculator-result span {
font-weight: bold;
color: #28a745;
font-size: 1.3rem;
margin-left: 5px;
}
.calculator-explanation {
margin-top: 30px;
padding-top: 20px;
border-top: 1px solid #eee;
font-size: 0.95rem;
line-height: 1.6;
color: #444;
}
.calculator-explanation h3 {
margin-bottom: 15px;
color: #333;
}
.calculator-explanation ul, .calculator-explanation ol {
margin-left: 20px;
margin-bottom: 15px;
}
.calculator-explanation li {
margin-bottom: 8px;
}
.calculator-explanation code {
background-color: #e0e0e0;
padding: 2px 5px;
border-radius: 3px;
}
@media (max-width: 576px) {
.calculator-inputs {
grid-template-columns: 1fr;
}
}
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRatePercent = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebt) || monthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRatePercent) || interestRatePercent <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var grossMonthlyIncome = annualIncome / 12;
var maxDtiRatio = 0.36; // Commonly used back-end DTI limit
var maxTotalMonthlyDebt = grossMonthlyIncome * maxDtiRatio;
var maxMortgagePayment = maxTotalMonthlyDebt – monthlyDebt;
if (maxMortgagePayment 0) {
var numerator = Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths);
if (denominator > 0) {
maxLoanAmount = maxMortgagePayment * (numerator / denominator);
} else {
// Handle cases where denominator might be zero (though unlikely with valid inputs)
resultDiv.innerHTML = "Calculation error: Could not determine loan amount.";
return;
}
} else {
// Handle 0% interest rate case separately (simple division)
maxLoanAmount = maxMortgagePayment * loanTermMonths;
}
var maxHomePrice = maxLoanAmount + downPayment;
// Display results
resultDiv.innerHTML = "Based on your inputs, the estimated maximum mortgage loan you could afford is: $" + maxLoanAmount.toFixed(2) + "" +
"The estimated maximum home price you could afford (including down payment) is: $" + maxHomePrice.toFixed(2) + "";
}