This calculator provides an ESTIMATE. Consult with a financial advisor and lender for accurate figures.
Includes credit cards, car loans, student loans, etc.
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Estimated Maximum Mortgage Affordability
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Understanding the Salary to Mortgage Affordability Calculator
Buying a home is a significant financial decision, and understanding how much mortgage you can afford is a crucial first step. This Salary to Mortgage Affordability Calculator helps you estimate your potential borrowing capacity based on your income, existing debts, and key mortgage terms. It uses common financial guidelines to give you a realistic idea of what lenders might consider affordable.
How the Calculator Works: The Math Behind Affordability
Lenders typically use debt-to-income (DTI) ratios to assess a borrower's ability to repay a mortgage. Two common DTI ratios are:
Front-End DTI (Housing Ratio): This ratio compares your potential total monthly housing expenses (principal, interest, property taxes, homeowner's insurance, and HOA fees – often called PITI) to your gross monthly income. A common guideline is to keep this below 28%.
Back-End DTI (Total Debt Ratio): This ratio compares your total monthly debt obligations (including the potential PITI and all other recurring debts like car loans, student loans, and credit card minimum payments) to your gross monthly income. A common guideline is to keep this below 36% to 43%, depending on the lender and loan type.
This calculator focuses on approximating the maximum loan amount you could qualify for by adhering to these DTI guidelines, considering your gross monthly income and existing monthly debt payments. It does not factor in all nuances of PITI (like property taxes and insurance, which vary by location) but uses the income and debt figures provided to estimate borrowing power.
Key Inputs Explained:
Annual Salary (Gross): Your total income before taxes and other deductions. This is the primary factor in determining affordability.
Total Monthly Debt Payments: This includes all your recurring monthly financial obligations outside of rent or a current mortgage. Reducing these can significantly increase your borrowing power.
Down Payment: While not directly used in the DTI calculation for maximum loan *amount*, a larger down payment reduces the loan principal needed, making the home more affordable and potentially increasing your chances of approval. It also affects your Loan-to-Value (LTV) ratio, which lenders consider.
Estimated Mortgage Interest Rate: Higher interest rates mean higher monthly payments for the same loan amount, thus reducing the maximum loan you can afford.
Mortgage Loan Term: A longer loan term (e.g., 30 years vs. 15 years) results in lower monthly payments for the same loan principal, potentially allowing for a larger loan amount. However, you will pay significantly more interest over the life of the loan.
How to Use the Calculator
Enter your Annual Gross Salary.
Add up all your Total Monthly Debt Payments (car loans, student loans, credit cards, etc.) and enter the sum.
Input your planned Down Payment amount.
Enter the Estimated Mortgage Interest Rate you expect to encounter.
Select the desired Mortgage Loan Term (in years).
Click "Calculate Max Mortgage".
The calculator will provide an estimated maximum mortgage amount you might be able to afford. Remember, this is a guideline. Your actual mortgage approval will depend on a lender's specific underwriting criteria, your credit score, employment history, assets, and other factors.
Factors Not Included (But Important!)
Credit Score: A higher credit score generally leads to better interest rates and loan terms.
Property Taxes & Homeowner's Insurance: These vary greatly by location and significantly impact your total monthly housing cost (PITI).
HOA Fees: If applicable, these add to your monthly housing costs.
Closing Costs: These are one-time fees paid at closing and can be substantial.
Private Mortgage Insurance (PMI): Typically required if your down payment is less than 20% on a conventional loan.
Lender Specific Guidelines: Different lenders have varying DTI limits and other requirements.
Economic Conditions: Interest rates and lending standards can fluctuate.
Using this tool can help you set realistic expectations and prepare for conversations with mortgage brokers and lenders.
function calculateMortgageAffordability() {
var annualSalary = parseFloat(document.getElementById("annualSalary").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var explanationTextElement = document.getElementById("explanationText");
var mortgageEstimateElement = document.getElementById("mortgageEstimate");
explanationTextElement.textContent = ""; // Clear previous explanation
mortgageEstimateElement.textContent = "$0"; // Reset to default
// — Input Validation —
if (isNaN(annualSalary) || annualSalary <= 0) {
alert("Please enter a valid Annual Salary.");
return;
}
if (isNaN(monthlyDebt) || monthlyDebt < 0) {
alert("Please enter a valid Total Monthly Debt Payments amount.");
return;
}
if (isNaN(downPayment) || downPayment < 0) {
alert("Please enter a valid Down Payment amount.");
return;
}
if (isNaN(interestRate) || interestRate 20) { // Rate limit to avoid extreme values
alert("Please enter a valid Estimated Mortgage Interest Rate (e.g., between 1% and 20%).");
return;
}
if (isNaN(loanTerm) || loanTerm <= 0) {
alert("Please select a valid Mortgage Loan Term.");
return;
}
// — Calculation Logic —
// Assumptions for DTI ratios (common lender guidelines)
var maxFrontEndDTI = 0.28; // Max housing expense to gross income
var maxBackEndDTI = 0.36; // Max total debt payments to gross income (conservative)
var grossMonthlyIncome = annualSalary / 12;
// Calculate maximum allowed total monthly debt payments (including potential PITI)
var maxTotalMonthlyObligation = grossMonthlyIncome * maxBackEndDTI;
// Calculate the maximum affordable monthly mortgage payment (P&I only)
// This is the maximum total obligation minus existing debts
var maxMonthlyMortgagePayment = maxTotalMonthlyObligation – monthlyDebt;
// Ensure the max monthly payment isn't negative
if (maxMonthlyMortgagePayment 0 && numberOfPayments > 0) {
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
// Ensure denominator is not zero before division
if (denominator > 0) {
maxLoanPrincipal = maxMonthlyMortgagePayment * (numerator / denominator);
} else {
// Handle case where denominator is effectively zero (e.g., very small rates/terms)
// This scenario is highly unlikely with typical mortgage parameters
maxLoanPrincipal = 0;
}
} else if (monthlyInterestRate === 0) {
// If interest rate is 0%, principal is just maxPayment * number of payments
maxLoanPrincipal = maxMonthlyMortgagePayment * numberOfPayments;
}
// The total estimated affordability is the loan principal plus the down payment
var estimatedMaxHomeAffordability = maxLoanPrincipal + downPayment;
// Format the output
var formattedMaxHomeAffordability = estimatedMaxHomeAffordability.toLocaleString('en-US', { style: 'currency', currency: 'USD', minimumFractionDigits: 0, maximumFractionDigits: 0 });
// Display result and explanation
mortgageEstimateElement.textContent = formattedMaxHomeAffordability;
explanationTextElement.textContent =
"Based on a Gross Monthly Income of $" + grossMonthlyIncome.toFixed(2) +
" and a maximum total debt-to-income ratio of " + (maxBackEndDTI * 100) + "%," +
" your maximum affordable monthly mortgage payment (Principal & Interest) is estimated at $" + maxMonthlyMortgagePayment.toFixed(2) + "." +
" This calculation considers your existing monthly debts of $" + monthlyDebt.toFixed(2) + "." +
" The estimated maximum loan principal you could support is approximately $" + maxLoanPrincipal.toFixed(2) + "." +
" Including your down payment of $" + downPayment.toFixed(2) + ", your estimated maximum home purchase price is " + formattedMaxHomeAffordability + ".";
}