Loan Amortization Calculator with Extra Payments

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Home Affordability Calculator

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You Can Afford a Home Up To:

$0

Estimated Monthly Payment: $0

Total Loan Amount: $0

function calculateAffordability() { var annualIncome = parseFloat(document.getElementById('annualIncome').value) || 0; var monthlyDebt = parseFloat(document.getElementById('monthlyDebt').value) || 0; var downPayment = parseFloat(document.getElementById('downPayment').value) || 0; var interestRate = parseFloat(document.getElementById('interestRate').value) / 100 / 12 || 0; var loanTermMonths = (parseFloat(document.getElementById('loanTerm').value) || 30) * 12; var annualTaxes = parseFloat(document.getElementById('propertyTaxes').value) || 0; var annualInsurance = (annualIncome * 0.005); // Estimate insurance at 0.5% of income var monthlyGrossIncome = annualIncome / 12; var monthlyTaxes = annualTaxes / 12; var monthlyInsurance = annualInsurance / 12; // Using the 36% Rule (Total Debt-to-Income) var maxTotalMonthlyDebtPayment = monthlyGrossIncome * 0.36; var availableForMortgagePITI = maxTotalMonthlyDebtPayment – monthlyDebt; // Ensure the result isn't negative if (availableForMortgagePITI < 0) availableForMortgagePITI = 0; // Monthly Principal & Interest only var maxPI = availableForMortgagePITI – monthlyTaxes – monthlyInsurance; if (maxPI <= 0) { alert("Based on your debt and income, a mortgage may not be feasible. Try reducing debt or increasing income."); return; } // Loan Amount Formula: P = M [ (1+r)^n – 1 ] / [ r(1+r)^n ] var loanAmount = maxPI * (Math.pow(1 + interestRate, loanTermMonths) – 1) / (interestRate * Math.pow(1 + interestRate, loanTermMonths)); var maxHomePrice = loanAmount + downPayment; // Formatting var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 }); document.getElementById('maxPriceDisplay').innerText = formatter.format(maxHomePrice); document.getElementById('monthlyPaymentDisplay').innerText = formatter.format(availableForMortgagePITI); document.getElementById('loanAmountDisplay').innerText = formatter.format(loanAmount); document.getElementById('affordabilityResult').style.display = 'block'; // Scroll to results document.getElementById('affordabilityResult').scrollIntoView({ behavior: 'smooth' }); }

Understanding Your Home Buying Power

Before you start browsing listings, it is critical to understand how much home you can actually afford. Lenders don't just look at your salary; they look at your overall financial health, specifically your Debt-to-Income (DTI) ratio.

The 28/36 Rule

Most financial experts and lenders follow the "28/36 Rule" to determine mortgage eligibility:

  • The 28% Rule: Your mortgage payment (including taxes and insurance) should not exceed 28% of your gross monthly income.
  • The 36% Rule: Your total debt payments (mortgage plus car loans, student loans, and credit cards) should not exceed 36% of your gross monthly income.

Key Factors Influencing Affordability

Your "Buying Power" is a moving target influenced by several external and internal factors:

  1. Interest Rates: Even a 1% increase in interest rates can reduce your purchasing power by tens of thousands of dollars.
  2. Down Payment: A larger down payment reduces your loan amount, which lowers your monthly interest costs and may eliminate the need for Private Mortgage Insurance (PMI).
  3. Property Taxes & Insurance: These vary significantly by location. A $400,000 home in Texas may cost more monthly than a $500,000 home in a state with lower property taxes.
  4. Credit Score: A higher credit score qualifies you for lower interest rates, directly increasing the loan amount you can afford.

Calculation Example

Imagine a household with an annual income of $100,000. Their monthly gross income is $8,333.

  • Total Debt Limit (36%): $3,000 per month.
  • If they have a $500 car payment, they have $2,500 remaining for their full mortgage payment (PITI).
  • At a 6.5% interest rate on a 30-year term, with $5,000 set aside for annual taxes/insurance, they could afford a home priced at approximately $355,000 with a $20,000 down payment.

Pro Tip: Just because a lender will lend you a certain amount doesn't mean you should borrow it. Always factor in lifestyle costs like travel, savings, and home maintenance (typically 1% of the home's value per year) when deciding on your final budget.

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