Buying a home is a significant financial decision, and understanding how much you can realistically afford is crucial. A mortgage affordability calculator helps you estimate the maximum loan amount you might qualify for based on your income, debts, and the terms of the loan.
Key Factors Influencing Affordability:
Gross Monthly Income: This is your total income before taxes and other deductions. Lenders use this as a primary measure of your ability to repay a loan.
Existing Monthly Debt Payments: This includes payments for credit cards, car loans, student loans, and any other recurring debts. High debt-to-income ratios can significantly limit your borrowing power.
Down Payment: The amount of money you pay upfront for the home. A larger down payment reduces the loan amount needed, potentially making you eligible for a larger mortgage or securing better loan terms.
Interest Rate: The annual percentage rate charged on the loan. A lower interest rate means lower monthly payments, allowing you to borrow more for the same monthly payment.
Loan Term: The duration over which you will repay the mortgage. Shorter loan terms result in higher monthly payments but less interest paid over time. Longer terms have lower monthly payments but more interest paid overall.
Lenders typically use debt-to-income ratios (DTI) to assess affordability. A common guideline is that your total housing expenses (including mortgage principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income, and your total debt obligations (including housing) should not exceed 36% of your gross monthly income. Our calculator provides an estimate based on these principles.
This calculator provides an estimate for informational purposes only and does not constitute a loan offer or guarantee of approval. Consult with a mortgage professional for personalized advice.
Example Calculation:
Let's consider someone with a gross monthly income of $6,000, existing monthly debt payments of $400, a down payment of $25,000, an annual interest rate of 6.5%, and a loan term of 30 years.
Using the calculator with these inputs would provide an estimated maximum mortgage amount they could potentially afford. For instance, if the calculator estimates a maximum monthly housing payment of $1,680 (28% of $6,000), and factoring in their existing debts, the tool helps determine the loan size that fits within these constraints.
function calculateMortgageAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var existingDebts = parseFloat(document.getElementById("existingDebts").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value) / 100;
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultElement = document.getElementById("result");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(monthlyIncome) || isNaN(existingDebts) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) ||
monthlyIncome <= 0 || existingDebts < 0 || downPayment < 0 || interestRate < 0 || loanTerm <= 0) {
resultElement.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Rule of thumb: Housing payment shouldn't exceed 28% of gross monthly income
var maxHousingPayment = monthlyIncome * 0.28;
// Rule of thumb: Total debt payments shouldn't exceed 36% of gross monthly income
var maxTotalDebtPayment = monthlyIncome * 0.36;
// Calculate the maximum allowable monthly debt payments for the mortgage itself
// This is the total allowed debt payment minus existing debts
var maxMortgagePayment = maxTotalDebtPayment – existingDebts;
// Ensure the maximum mortgage payment is not negative
if (maxMortgagePayment < 0) {
maxMortgagePayment = 0;
}
// We'll use the more conservative of the two rules (maxHousingPayment vs maxMortgagePayment)
// as the target monthly mortgage payment. In a real scenario, lenders would use DTI more rigorously.
// For simplicity here, we'll aim for maxHousingPayment and ensure it fits within maxMortgagePayment.
var targetMonthlyPayment = Math.min(maxHousingPayment, maxMortgagePayment);
if (targetMonthlyPayment 0) {
principalLoanAmount = targetMonthlyPayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else {
// If interest rate is 0, the loan amount is simply the target payment times the number of payments
principalLoanAmount = targetMonthlyPayment * numberOfPayments;
}
var estimatedMaxLoan = principalLoanAmount;
var totalAffordableHomePrice = estimatedMaxLoan + downPayment;
// Format currency for display
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
resultElement.innerHTML =
"