Use this calculator to estimate how much house you can afford based on your income, debts, and down payment. Understanding your potential mortgage affordability is a crucial first step in the home-buying process.
How Mortgage Affordability Works
Lenders use several factors to determine how much you can borrow, primarily focusing on your ability to repay the loan. Key metrics include your Debt-to-Income Ratio (DTI).
Debt-to-Income Ratio (DTI)
Your DTI is a comparison of your gross monthly income to your total monthly debt obligations. Lenders typically look for a front-end DTI (housing costs only) of around 28% and a back-end DTI (all debt, including housing) of around 36%, though these can vary. This calculator uses a common guideline of 36% for total debt payments relative to gross income.
Key Components of Affordability
Gross Income: Your total income before taxes and deductions.
Existing Monthly Debt: Includes credit card payments, student loans, car loans, personal loans, and any other recurring debt payments.
Down Payment: The amount of cash you pay upfront towards the home purchase. A larger down payment reduces the loan amount needed and can improve your chances of approval.
Interest Rate: The annual percentage rate charged on the loan. Higher rates mean higher monthly payments for the same loan amount.
Loan Term: The length of time you have to repay the loan (e.g., 15, 20, or 30 years). Shorter terms result in higher monthly payments but less interest paid overall.
The Calculation
This calculator estimates your maximum affordable home price by working backward. It considers your annual income, existing monthly debts, and the lender's typical DTI limits to determine the maximum monthly mortgage payment you can afford. Then, using the provided interest rate and loan term, it calculates the maximum loan amount and adds your down payment to estimate the maximum home price.
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function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
// Input validation
if (isNaN(annualIncome) || annualIncome < 0 ||
isNaN(monthlyDebt) || monthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate 100 ||
isNaN(loanTerm) || loanTerm <= 0) {
resultDiv.textContent = "Please enter valid positive numbers for all fields.";
resultDiv.style.color = "#dc3545"; // Red for error
return;
}
var monthlyIncome = annualIncome / 12;
var maxTotalMonthlyDebtAllowed = monthlyIncome * 0.36; // 36% DTI
var maxMortgagePayment = maxTotalMonthlyDebtAllowed – monthlyDebt;
if (maxMortgagePayment 0) {
maxLoanAmount = maxMortgagePayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else {
// If interest rate is 0 (unlikely for mortgage but good to handle), loan amount is simply maxPayment * numberOfPayments
maxLoanAmount = maxMortgagePayment * numberOfPayments;
}
var maxAffordablePrice = maxLoanAmount + downPayment;
// Format currency for readability
var formattedMaxAffordablePrice = maxAffordablePrice.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedMaxMortgagePayment = maxMortgagePayment.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = "Estimated Maximum Affordable Home Price: " + formattedMaxAffordablePrice + "" +
"Estimated Maximum Loan Amount: " + formattedMaxLoanAmount + "" +
"Estimated Maximum Monthly Mortgage Payment (P&I): " + formattedMaxMortgagePayment;
resultDiv.style.color = "#28a745"; // Green for success
}