This calculator helps you estimate how much you can afford to borrow for a mortgage based on your income, debts, and estimated housing costs. It's a crucial tool when planning your home purchase.
Understanding Mortgage Affordability
Determining how much mortgage you can afford is a cornerstone of successful homeownership. It involves more than just looking at your income; lenders and financial advisors consider a holistic view of your financial situation.
Key Factors in Mortgage Affordability:
Gross Monthly Income: This is the total income you earn before taxes and other deductions. Lenders often use this as a primary indicator of your ability to repay a loan.
Existing Debt Payments: Any recurring monthly debt payments, such as credit card minimums, student loans, and car loans, reduce the amount of income available for a mortgage. The Debt-to-Income (DTI) ratio is a critical metric here.
Down Payment: A larger down payment reduces the loan amount needed, lowers your Loan-to-Value (LTV) ratio, and can significantly impact your monthly payments and overall affordability.
Property Taxes and Homeowner's Insurance: These are essential costs of homeownership that must be factored into your total monthly housing expense. They can vary significantly by location and property type.
Interest Rate: The annual interest rate on your mortgage is one of the most impactful factors. A higher interest rate means higher monthly payments for the same loan amount.
Loan Term: The length of your mortgage (e.g., 15, 20, 30 years). A shorter term typically means higher monthly payments but less interest paid over the life of the loan, while a longer term results in lower monthly payments but more interest paid overall.
How the Calculator Works:
This calculator aims to provide an estimate based on common lending guidelines, such as the 28/36 rule, where your total housing costs (including PITI – Principal, Interest, Taxes, and Insurance) should not exceed 28% of your gross monthly income, and your total debt payments (including PITI) should not exceed 36% of your gross monthly income. It then works backward from your maximum affordable monthly payment to estimate the maximum loan amount you might qualify for, considering your down payment.
Disclaimer: This calculator provides an estimate only and should not be considered a loan approval or a guarantee of affordability. Your actual mortgage affordability may vary based on lender-specific criteria, credit score, loan programs, and other factors. It is highly recommended to consult with a mortgage professional for personalized advice.
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function calculateMortgageAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var estimatedPropertyTax = parseFloat(document.getElementById("estimatedPropertyTax").value);
var estimatedHomeInsurance = parseFloat(document.getElementById("estimatedHomeInsurance").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(monthlyIncome) || isNaN(monthlyDebtPayments) || isNaN(downPayment) || isNaN(estimatedPropertyTax) || isNaN(estimatedHomeInsurance) || isNaN(interestRate) || isNaN(loanTerm) ||
monthlyIncome <= 0 || monthlyDebtPayments < 0 || downPayment < 0 || estimatedPropertyTax < 0 || estimatedHomeInsurance < 0 || interestRate <= 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Estimate PITI components
var monthlyPropertyTax = estimatedPropertyTax / 12;
var monthlyHomeInsurance = estimatedHomeInsurance / 12;
// Calculate maximum allowed housing payment (28% rule)
var maxHousingPayment = monthlyIncome * 0.28;
// Calculate maximum allowed total debt payment (36% rule)
var maxTotalDebtPayment = monthlyIncome * 0.36;
// Calculate available amount for P&I after other debts
var availableForPI = maxTotalDebtPayment – monthlyDebtPayments;
// The actual maximum monthly payment for P&I is the lesser of what's available after debts or what fits the 28% rule, minus taxes and insurance.
var maxMonthlyPI = Math.min(maxHousingPayment, availableForPI) – monthlyPropertyTax – monthlyHomeInsurance;
if (maxMonthlyPI 0) {
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
principal = maxMonthlyPI * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
principal = maxMonthlyPI * (loanTerm * 12); // Simple calculation if interest rate is 0, though unlikely for mortgages
}
var estimatedAffordableHomePrice = principal + downPayment;
resultDiv.innerHTML = "Estimated Maximum Loan Amount: $" + principal.toFixed(2) + "" +
"Estimated Maximum Home Price You Can Afford: $" + estimatedAffordableHomePrice.toFixed(2);
}