Mortgage Affordability Calculator

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Mortgage Affordability Calculator
Conservative (28% DTI – Housing Only)Standard (36% DTI – Total Debt)FHA/Aggressive (43% DTI – Total Debt)Maximum (50% DTI – Total Debt)
Affordability Summary:
Maximum Home Price: $ 0.00
Recommended Max Loan: $ 0.00
Estimated Monthly Payment (P&I): $ 0.00
function calculateAffordability(){var annualIncome=parseFloat(document.getElementById('annualIncome').value);var monthlyDebts=parseFloat(document.getElementById('monthlyDebts').value);var downPayment=parseFloat(document.getElementById('downPayment').value);var interestRate=parseFloat(document.getElementById('interestRate').value);var loanTerm=parseFloat(document.getElementById('loanTerm').value);var dti=parseFloat(document.getElementById('given_data').value);var includeExtras=document.getElementById('includeExtras').checked;if(isNaN(annualIncome)||isNaN(monthlyDebts)||isNaN(downPayment)||isNaN(interestRate)||isNaN(loanTerm)){alert('Please enter valid numeric values.');return;}var monthlyGross=annualIncome/12;var maxTotalMonthlyDebt=monthlyGross*dti;var availableForMortgage=maxTotalMonthlyDebt-monthlyDebts;if(availableForMortgage<=0){alert('Monthly debts exceed the selected DTI limit for this income level.');return;}var monthlyRate=interestRate/100/12;var totalMonths=loanTerm*12;var factor=(Math.pow(1+monthlyRate,totalMonths)-1)/(monthlyRate*Math.pow(1+monthlyRate,totalMonths));var maxLoan=0;var estimatedPrice=0;if(includeExtras){var monthlyTaxInsRatio=0.012/12;var adjustedFactor=1/((1/factor)+monthlyTaxInsRatio);maxLoan=availableForMortgage*adjustedFactor;estimatedPrice=maxLoan+downPayment;}else{maxLoan=availableForMortgage*factor;estimatedPrice=maxLoan+downPayment;}var monthlyPI=maxLoan*(monthlyRate*Math.pow(1+monthlyRate,totalMonths))/(Math.pow(1+monthlyRate,totalMonths)-1);document.getElementById('homePrice').innerHTML=estimatedPrice.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2});document.getElementById('loanAmount').innerHTML=maxLoan.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2});document.getElementById('monthlyPI').innerHTML=monthlyPI.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2});}

How to Use the Mortgage Affordability Calculator

A mortgage affordability calculator is an essential tool for prospective homebuyers to estimate how much house they can realistically afford based on their financial situation. By analyzing your income, debts, and interest rates, this tool provides a clear picture of your purchasing power before you start house hunting.

To use this calculator, follow these steps:

Gross Annual Income
Enter your total yearly salary before taxes. Include bonuses or consistent secondary income.
Monthly Debts
Enter the total of your monthly recurring debt payments, such as car loans, student loans, and minimum credit card payments.
Down Payment
The amount of cash you have available to pay upfront for the home purchase.
Interest Rate & Term
The expected annual interest rate and the length of the loan (typically 15 or 30 years).

How Mortgage Affordability is Calculated

Lenders use specific ratios to determine how much they are willing to lend you. The most important metric is the Debt-to-Income (DTI) ratio. This is the percentage of your gross monthly income that goes toward paying debts.

Max Monthly Payment = (Gross Monthly Income × DTI Limit) – Monthly Debts

Once the maximum monthly payment is identified, the mortgage affordability calculator uses the present value of an annuity formula to determine the loan amount:

  • P: Principal Loan Amount
  • PMT: Maximum Monthly Payment
  • r: Monthly Interest Rate (Annual Rate / 12)
  • n: Total Number of Payments (Years × 12)

Mortgage Affordability Example

Scenario: A couple earns a combined gross annual income of $100,000. They have $500 in monthly car payments and $200 in student loans ($700 total monthly debt). They have $50,000 for a down payment and seek a 30-year loan at 7% interest.

Step-by-step calculation:

  1. Monthly Gross Income: $100,000 / 12 = $8,333.33
  2. Max Total Debt (36% DTI): $8,333.33 × 0.36 = $3,000
  3. Available for Mortgage: $3,000 – $700 = $2,300
  4. Calculate Loan Amount: Using the formula with 7% interest over 30 years, a $2,300 payment supports a loan of approximately $345,700.
  5. Total Affordability: $345,700 (Loan) + $50,000 (Down Payment) = $395,700

Common Questions

What is a "safe" Debt-to-Income ratio?

Most financial experts suggest keeping your total debt-to-income ratio at or below 36%. This ensures you have enough remaining income for taxes, food, healthcare, and savings. However, some loan programs like FHA allow for DTIs as high as 43% or even 50% in special circumstances.

How does interest rate affect my affordability?

Interest rates have a massive impact on your purchasing power. For every 1% increase in interest rates, your purchasing power typically drops by about 10%. This is why using a mortgage affordability calculator frequently during rate fluctuations is critical.

Should I include property taxes in the calculation?

Yes. Lenders look at "PITI" (Principal, Interest, Taxes, and Insurance). If you don't account for taxes and insurance, you may over estimate your affordability by 15-20%. Our calculator includes an optional estimation for these costs to provide a more realistic home price.

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