Mortgage Affordability Calculator
Your Estimated Mortgage Affordability
.calculator-container {
font-family: sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 8px;
background-color: #f9f9f9;
}
.calculator-inputs, .calculator-results {
margin-bottom: 20px;
}
.input-group {
margin-bottom: 15px;
}
.input-group label {
display: block;
margin-bottom: 5px;
font-weight: bold;
}
.input-group input {
width: calc(100% – 22px);
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
}
button {
background-color: #4CAF50;
color: white;
padding: 10px 15px;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 16px;
}
button:hover {
background-color: #45a049;
}
#results div {
margin-top: 10px;
font-size: 1.1em;
}
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTerm").value);
var propertyTaxRate = parseFloat(document.getElementById("propertyTaxRate").value);
var annualHomeInsurance = parseFloat(document.getElementById("homeInsurance").value);
var pmiRate = parseFloat(document.getElementById("pmiRate").value);
var resultsDiv = document.getElementById("results");
resultsDiv.style.display = "block";
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(annualInterestRate) || isNaN(loanTermYears) || isNaN(propertyTaxRate) || isNaN(annualHomeInsurance) || isNaN(pmiRate)) {
document.getElementById("maxMortgageAmount").innerHTML = "Please enter valid numbers for all fields.";
document.getElementById("maxMonthlyPayment").innerHTML = "";
document.getElementById("maxHomePrice").innerHTML = "";
return;
}
// Lenders typically use DTI ratios. A common guideline is the 28/36 rule:
// 28% of gross monthly income for housing costs (PITI)
// 36% of gross monthly income for total debt (housing + other debts)
// We'll calculate affordability based on both and take the more conservative estimate.
var grossMonthlyIncome = annualIncome / 12;
// Max Housing Payment (PITI) based on 28% rule
var maxHousingPayment28 = grossMonthlyIncome * 0.28;
// Max Total Debt Payment based on 36% rule
var maxTotalDebtPayment36 = grossMonthlyIncome * 0.36;
// Max allowed monthly debt payment (including proposed mortgage)
var maxAllowedMonthlyDebt = maxTotalDebtPayment36;
// Calculate the maximum monthly mortgage payment the borrower can afford after accounting for other debts
var maxMonthlyMortgagePayment = maxAllowedMonthlyDebt – monthlyDebt;
// Ensure the max monthly mortgage payment is not negative
if (maxMonthlyMortgagePayment < 0) {
maxMonthlyMortgagePayment = 0;
}
// Now, let's work backward from the max monthly mortgage payment to find the max loan amount.
// The monthly payment includes Principal, Interest, Taxes, Insurance (PITI) and potentially PMI.
// We need to estimate components of PITI to find the Principal & Interest (P&I) portion.
// Estimate monthly taxes, insurance, and PMI based on a hypothetical max home price (we'll refine this)
// For now, let's assume a maximum home price for these calculations, and then iterate or use a direct approach.
// A simpler approach is to directly calculate the max loan amount that results in the maxMonthlyMortgagePayment.
// The monthly payment formula for a mortgage is:
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where:
// M = Monthly Payment (P&I)
// P = Principal Loan Amount
// i = monthly interest rate (annualRate / 12)
// n = total number of payments (loanTermYears * 12)
// First, let's use the maxHousingPayment28 rule as a target for PITI.
// PITI = Principal & Interest (P&I) + Taxes + Insurance + PMI
// We'll use the *lower* of the two limits: maxHousingPayment28 and (maxAllowedMonthlyDebt – monthlyDebt).
var effectiveMaxMonthlyPayment = Math.min(maxHousingPayment28, maxMonthlyMortgagePayment);
if (effectiveMaxMonthlyPayment <= 0) {
document.getElementById("maxMortgageAmount").innerHTML = "Based on your debt and income, you may not qualify for a new mortgage at this time.";
document.getElementById("maxMonthlyPayment").innerHTML = "";
document.getElementById("maxHomePrice").innerHTML = "";
return;
}
// We need to estimate the non-P&I parts of the payment to isolate P&I. This is tricky because taxes and PMI depend on home price.
// Let's make an assumption: we'll calculate the maximum P&I payment FIRST, then work towards the max home price.
// For simplicity in this calculator, we'll estimate based on a common debt-to-income ratio for total debt.
// A more precise method would involve iteration.
// Let's calculate the max P&I payment by subtracting estimated monthly taxes, insurance, and PMI from effectiveMaxMonthlyPayment.
// This requires an assumption about the home price. This is a common challenge for affordability calculators without knowing the target price.
// We'll use a simplified approach where we calculate the maximum loan amount that fits the P&I part, assuming taxes/insurance/PMI will be covered by the PITI budget.
// If we use the 28% rule for PITI:
// Max PITI = grossMonthlyIncome * 0.28
// Max P&I = Max PITI – Monthly Taxes – Monthly Insurance – Monthly PMI
// Monthly interest rate
var monthlyInterestRate = annualInterestRate / 100 / 12;
var loanTermMonths = loanTermYears * 12;
// If interest rate is 0, this formula breaks. Handle that edge case.
var maxPrincipalAndInterestPayment;
if (monthlyInterestRate === 0) {
maxPrincipalAndInterestPayment = effectiveMaxMonthlyPayment; // In this case, all payment goes to principal.
} else {
// Rearrange the mortgage payment formula to solve for P:
// P = M * [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var numerator = Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths);
var maxLoanAmountFromPI = effectiveMaxMonthlyPayment * (numerator / denominator);
maxPrincipalAndInterestPayment = effectiveMaxMonthlyPayment; // This is the P&I part of the budget
}
// Now, let's find the maximum loan amount (P) that fits this P&I payment.
var maxLoanAmount = 0;
var maxHomePriceEstimate = 0;
// Iterative approach (or direct calculation if we can isolate P):
// We want to find P such that:
// (P * [ i(1 + i)^n ] / [ (1 + i)^n – 1]) + (P * propertyTaxRate/12) + (annualHomeInsurance/12) + (P * pmiRate/12) <= effectiveMaxMonthlyPayment
// Let's try to directly calculate the maximum loan amount (P).
// Effective Max Monthly Payment = P&I + Taxes + Insurance + PMI
// effectiveMaxMonthlyPayment = [ P * i(1+i)^n / ((1+i)^n – 1) ] + [ P * propertyTaxRate/12 ] + [ annualHomeInsurance/12 ] + [ P * pmiRate/12 ]
// Group terms with P:
// effectiveMaxMonthlyPayment – (annualHomeInsurance/12) = P * [ (i(1+i)^n / ((1+i)^n – 1)) + (propertyTaxRate/12) + (pmiRate/12) ]
var nonPIBudget = effectiveMaxMonthlyPayment – (annualHomeInsurance / 12);
var pFactor = 0;
if (monthlyInterestRate === 0) {
pFactor = (propertyTaxRate / 100 / 12) + (pmiRate / 100 / 12);
} else {
var piFormula = (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths)) / (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1);
pFactor = piFormula + (propertyTaxRate / 100 / 12) + (pmiRate / 100 / 12);
}
if (pFactor <= 0) { // Avoid division by zero or negative factors
document.getElementById("maxMortgageAmount").innerHTML = "Calculation error: Invalid factors.";
document.getElementById("maxMonthlyPayment").innerHTML = "";
document.getElementById("maxHomePrice").innerHTML = "";
return;
}
// Max loan amount (Principal P)
maxLoanAmount = nonPIBudget / pFactor;
if (maxLoanAmount < 0) maxLoanAmount = 0;
// The maximum home price is the loan amount plus the down payment
maxHomePriceEstimate = maxLoanAmount + downPayment;
// Re-calculate the actual estimated PITI for the derived max loan amount and max home price.
var estimatedMonthlyTaxes = maxLoanAmount * (propertyTaxRate / 100 / 12);
var estimatedMonthlyPMI = maxLoanAmount * (pmiRate / 100 / 12);
var estimatedMonthlyInsurance = annualHomeInsurance / 12;
var estimatedPAndI = 0;
if (monthlyInterestRate === 0) {
estimatedPAndI = maxLoanAmount; // If rate is 0, payment is just principal
} else {
var numeratorPI = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths);
var denominatorPI = Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1;
estimatedPAndI = maxLoanAmount * (numeratorPI / denominatorPI);
}
var actualEstimatedMonthlyPayment = estimatedPAndI + estimatedMonthlyTaxes + estimatedMonthlyInsurance + estimatedMonthlyPMI;
document.getElementById("maxMortgageAmount").innerHTML = "Maximum Loan Amount: $" + maxLoanAmount.toFixed(2);
document.getElementById("maxMonthlyPayment").innerHTML = "Estimated Maximum Monthly PITI Payment: $" + actualEstimatedMonthlyPayment.toFixed(2);
document.getElementById("maxHomePrice").innerHTML = "Estimated Maximum Home Price (with your down payment): $" + maxHomePriceEstimate.toFixed(2);
}
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. Mortgage affordability calculators help estimate the maximum loan amount and home price you might qualify for, based on your financial situation and current market conditions.
Key Factors Influencing Affordability
Several variables play a significant role in how much a lender will allow you to borrow and how much you can comfortably afford:
- Income: Your gross monthly income is the primary factor. Lenders use debt-to-income (DTI) ratios to assess your ability to handle new debt.
- Existing Debts: Recurring monthly debt payments (credit cards, car loans, student loans, personal loans) reduce the amount of income available for a mortgage.
- Down Payment: A larger down payment reduces the loan amount needed, which can significantly increase your affordability and potentially lower your interest rate or eliminate the need for Private Mortgage Insurance (PMI).
- Interest Rate: Even small changes in interest rates can dramatically impact your monthly payment and the total interest paid over the life of the loan.
- Loan Term: Longer loan terms (e.g., 30 years vs. 15 years) result in lower monthly payments but more interest paid over time.
- Property Taxes and Homeowners Insurance: These are essential components of your total monthly housing cost (PITI – Principal, Interest, Taxes, Insurance) and are factored into affordability calculations.
- Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home's purchase price, lenders typically require PMI, which adds to your monthly housing cost.
Common Affordability Guidelines (e.g., the 28/36 Rule)
Lenders often use DTI ratios as a benchmark:
- Front-End Ratio (Housing Ratio): This ratio compares your potential monthly housing payment (Principal, Interest, Property Taxes, Homeowners Insurance, and PMI – 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 compares your total monthly debt obligations (including the proposed mortgage payment plus all other recurring debts like car loans, student loans, and credit card minimums) to your gross monthly income. A common guideline is that total debt should not exceed 36% of your gross monthly income.
This calculator considers both these ratios, providing a more comprehensive estimate. It calculates the maximum monthly mortgage payment you can afford based on these DTI rules, then works backward to estimate the maximum loan amount and, consequently, the maximum home price you could potentially afford given your down payment.
Disclaimer: This calculator provides an estimate for informational purposes only. Actual loan approval amounts and terms may vary significantly based on lender policies, credit score, specific property details, and other underwriting factors.