This calculator helps you estimate the maximum mortgage amount you can afford based on your income, debts, and desired monthly payment.
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function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var existingDebts = parseFloat(document.getElementById("existingDebts").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var propertyTaxes = parseFloat(document.getElementById("propertyTaxes").value);
var homeInsurance = parseFloat(document.getElementById("homeInsurance").value);
var pmi = parseFloat(document.getElementById("pmi").value);
var resultDiv = document.getElementById("result");
// Clear previous results and errors
resultDiv.innerHTML = "";
// — Input Validation —
if (isNaN(annualIncome) || annualIncome <= 0) {
resultDiv.innerHTML = "Please enter a valid annual gross income.";
return;
}
if (isNaN(existingDebts) || existingDebts < 0) {
resultDiv.innerHTML = "Please enter a valid monthly debt payment.";
return;
}
if (isNaN(downPayment) || downPayment < 0) {
resultDiv.innerHTML = "Please enter a valid down payment amount.";
return;
}
if (isNaN(interestRate) || interestRate 20) {
resultDiv.innerHTML = "Please enter a valid annual interest rate (e.g., 3-7%).";
return;
}
if (isNaN(loanTerm) || loanTerm 50) {
resultDiv.innerHTML = "Please enter a valid loan term in years (e.g., 15-30).";
return;
}
if (isNaN(propertyTaxes) || propertyTaxes < 0) {
resultDiv.innerHTML = "Please enter a valid annual property tax amount.";
return;
}
if (isNaN(homeInsurance) || homeInsurance < 0) {
resultDiv.innerHTML = "Please enter a valid annual home insurance amount.";
return;
}
if (isNaN(pmi) || pmi < 0) {
resultDiv.innerHTML = "Please enter a valid annual PMI amount.";
return;
}
// — Calculations —
// General rule of thumb: Front-end ratio (housing costs) should not exceed 28% of gross monthly income
// and Back-end ratio (total debt) should not exceed 36% of gross monthly income.
// We will calculate affordability based on the more restrictive back-end ratio as a starting point,
// but also consider the front-end ratio.
var grossMonthlyIncome = annualIncome / 12;
var maxMonthlyDebtPayment = grossMonthlyIncome * 0.36; // 36% back-end ratio
var maxHousingPayment = grossMonthlyIncome * 0.28; // 28% front-end ratio
var allowedMonthlyPITI = maxMonthlyDebtPayment – existingDebts; // PITI = Principal, Interest, Taxes, Insurance
// Ensure allowedMonthlyPITI is not negative
if (allowedMonthlyPITI < 0) {
resultDiv.innerHTML = "Based on your existing debts and income, you may not qualify for a mortgage at this time. Please consult with a mortgage professional.";
return;
}
// Let's calculate the maximum loan amount based on the allowed monthly PITI and other costs
var monthlyPropertyTaxes = propertyTaxes / 12;
var monthlyHomeInsurance = homeInsurance / 12;
var monthlyPMI = pmi / 12;
var maxMonthlyPrincipalAndInterest = allowedMonthlyPITI – monthlyPropertyTaxes – monthlyHomeInsurance – monthlyPMI;
// Ensure maxMonthlyPrincipalAndInterest is not negative
if (maxMonthlyPrincipalAndInterest 0) {
var factor = Math.pow(1 + monthlyInterestRate, numberOfPayments);
maxLoanAmount = maxMonthlyPrincipalAndInterest * (factor – 1) / (monthlyInterestRate * factor);
} else { // Handle case of 0% interest rate (unlikely for mortgages but for completeness)
maxLoanAmount = maxMonthlyPrincipalAndInterest * numberOfPayments;
}
// The total affordable home price is the maximum loan amount plus the down payment.
var maxAffordableHomePrice = maxLoanAmount + downPayment;
// — Display Results —
if (maxAffordableHomePrice > 0) {
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxHomePrice = maxAffordableHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyPITI = allowedMonthlyPITI.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = "Based on your inputs, the estimated maximum home price you might be able to afford is: " + formattedMaxHomePrice + "" +
"This includes a maximum loan amount of: " + formattedMaxLoanAmount + "" +
"Estimated maximum monthly PITI (Principal, Interest, Taxes, Insurance): " + formattedMonthlyPITI + "" +
"Note: This is an estimate. Actual loan approval depends on lender requirements, credit score, market conditions, and a full financial review.";
} else {
resultDiv.innerHTML = "It appears based on these figures that your estimated monthly housing costs, including taxes and insurance, exceed your affordable limit for this loan term and interest rate. Please adjust your inputs or consult a financial advisor.";
}
}
Understanding Mortgage Affordability
Buying a home is a significant financial milestone, and understanding how much mortgage you can afford is crucial. Several factors influence this, and lenders use specific ratios to determine loan approval. This calculator aims to provide an estimate of your borrowing capacity.
Key Factors in Mortgage Affordability
Gross Monthly Income: This is your total income before taxes and deductions. Lenders use this as the primary basis for determining your repayment ability.
Existing Monthly Debt Payments: This includes payments for car loans, student loans, credit card minimums, personal loans, and any other recurring debts. These payments directly reduce the amount of income available for a mortgage.
Down Payment: The amount of money you pay upfront. A larger down payment reduces the loan amount needed, potentially allowing for a more affordable monthly payment or qualifying for a larger overall home price.
Interest Rate: The annual percentage rate charged by the lender. Even small differences in interest rates can significantly impact your monthly payment and the total interest paid over the life of the loan.
Loan Term: The duration of the mortgage, typically 15, 20, or 30 years. Longer terms result in lower monthly payments but higher total interest paid.
Property Taxes: Annual taxes levied by local government on your property. These are typically paid monthly as part of your mortgage payment (escrow).
Homeowner's Insurance: Insurance protecting your home against damage or loss. Also usually paid monthly via escrow.
Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home's purchase price, lenders often require PMI to protect themselves against default. This adds to your monthly housing costs.
How Lenders Evaluate Affordability: Debt-to-Income Ratios
Lenders commonly use two main debt-to-income (DTI) ratios:
Front-End Ratio (Housing Ratio): This ratio compares your estimated total monthly housing costs (principal, interest, taxes, insurance – PITI) to your gross monthly income. A common guideline is that PITI should not exceed 28% of your gross monthly income.
Back-End Ratio (Total Debt Ratio): This ratio compares your total monthly debt obligations (including PITI and all other recurring debts like car loans and credit cards) to your gross monthly income. A typical guideline is that total DTI should not exceed 36%. This is often the more restrictive ratio.
Our calculator uses the 36% back-end ratio as a primary driver to determine the maximum affordable monthly housing payment, then subtracts estimated taxes, insurance, and PMI to find the portion available for principal and interest. This figure is then used to estimate the maximum loan amount. The affordable home price is the sum of this maximum loan amount and your down payment.
Maximum Monthly Principal & Interest (P&I): $2,300 (Max PITI) – $475 (Other PITI) = $1,825
Using the mortgage payment formula with a 6% annual interest rate (0.5% monthly) over 30 years (360 months), a monthly P&I payment of $1,825 supports a loan principal of approximately $304,000.
Maximum Affordable Home Price: $304,000 (Loan Amount) + $30,000 (Down Payment) = $334,000
In this scenario, the estimated maximum affordable home price is around $334,000.
Important Considerations
This calculator provides a helpful estimate, but it's essential to remember that:
Lender qualification criteria can vary.
Your credit score significantly impacts the interest rate you'll receive and your overall approval chances.
This calculation doesn't include potential HOA fees, closing costs, or maintenance expenses.
Market conditions and lender-specific programs can influence affordability.
Always consult with a mortgage professional or lender for a pre-approval and a more precise understanding of your borrowing power.