Determining how much house you can afford is a crucial step in the home-buying process. This mortgage affordability calculator helps you estimate the maximum loan amount you might qualify for, which, combined with your down payment, indicates your potential purchasing power.
Key Factors:
Annual Household Income: This is the primary driver of your borrowing capacity. Lenders assess your ability to repay based on your income.
Total Monthly Debt Payments: Existing debts like car loans, student loans, and credit card payments reduce the amount of income available for a mortgage. Lenders often look at your debt-to-income ratio (DTI).
Down Payment: The more you put down, the less you need to borrow, which can increase your affordability and potentially get you better loan terms.
Interest Rate: A higher interest rate means higher monthly payments for the same loan amount, thus reducing affordability.
Loan Term: A longer loan term (e.g., 30 years vs. 15 years) results in lower monthly payments, making a larger loan amount seem affordable, but you'll pay more interest over time.
How it Works (Simplified):
This calculator uses common lending guidelines to estimate affordability. A typical rule of thumb is that your total monthly housing expenses (including principal, interest, property taxes, and homeowner's insurance – often referred to as PITI) should not exceed 28% of your gross monthly income. Additionally, your total debt obligations (including the estimated mortgage payment) should not exceed 36% of your gross monthly income (this is your Debt-to-Income ratio or DTI).
Our calculator first estimates the maximum monthly PITI payment you can afford based on these ratios, then works backward to calculate the maximum loan principal you could borrow for that payment, given your specified interest rate and loan term. Finally, it adds your down payment to this loan principal to estimate your maximum affordable home price.
Disclaimer: This calculator provides an estimate only. Actual loan approval and the maximum loan amount you can borrow will depend on a lender's specific underwriting criteria, your credit score, employment history, and other financial factors. It's essential to consult with a mortgage professional for personalized advice.
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");
resultDiv.innerHTML = ""; // Clear previous results
// — Input Validation —
if (isNaN(annualIncome) || annualIncome <= 0) {
resultDiv.innerHTML = "Please enter a valid annual household income.";
return;
}
if (isNaN(monthlyDebt) || monthlyDebt < 0) {
resultDiv.innerHTML = "Please enter a valid monthly debt amount.";
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., 3.5 to 7.5).";
return;
}
if (isNaN(loanTerm) || loanTerm 30) {
resultDiv.innerHTML = "Please enter a valid loan term in years (typically up to 30).";
return;
}
// — Calculations —
// Rule of thumb: Front-end ratio (housing expense) ~28% of gross monthly income
// Rule of thumb: Back-end ratio (total debt) ~36% of gross monthly income
var grossMonthlyIncome = annualIncome / 12;
// Max allowed total monthly debt payments (including potential mortgage PITI)
var maxTotalMonthlyObligations = grossMonthlyIncome * 0.36;
// Max allowed monthly mortgage payment (PITI) is total obligations minus existing debts
var maxMonthlyMortgagePayment = maxTotalMonthlyObligations – monthlyDebt;
// Ensure maxMonthlyMortgagePayment is not negative
if (maxMonthlyMortgagePayment 0) {
// Standard mortgage payment formula derived for principal: P = M * [1 – (1 + r)^-n] / r
maxLoanPrincipal = maxMonthlyMortgagePayment * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else if (maxMonthlyMortgagePayment > 0) {
// If interest rate is 0, max loan is simply max payment times number of payments
maxLoanPrincipal = maxMonthlyMortgagePayment * numberOfPayments;
}
// Estimate maximum affordable home price
var maxAffordablePrice = maxLoanPrincipal + downPayment;
// — Display Results —
var formattedMaxAffordablePrice = maxAffordablePrice.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
var formattedMaxLoanPrincipal = maxLoanPrincipal.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
var formattedMaxMonthlyMortgagePayment = maxMonthlyMortgagePayment.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
var formattedGrossMonthlyIncome = grossMonthlyIncome.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
resultDiv.innerHTML =
"
Estimated Affordability:
" +
"Based on the provided information and general lending guidelines:" +
"
" +
"
Estimated Maximum Affordable Home Price: " + formattedMaxAffordablePrice + "
" +
"
Estimated Maximum Loan Principal: " + formattedMaxLoanPrincipal + "