Determining how much house you can afford is a crucial step in the home-buying process. This Mortgage Affordability Calculator helps you estimate your potential borrowing power based on your income, existing debts, down payment, and prevailing interest rates.
Key Factors:
Annual Income: Your gross annual income is a primary driver of how much a lender might be willing to loan you. Lenders typically look at your debt-to-income ratio (DTI).
Monthly Debt Payments: This includes all your existing monthly financial obligations, such as credit card payments, student loans, car loans, and personal loans. These are subtracted from your income to determine how much is available for a mortgage.
Down Payment: A larger down payment reduces the loan amount needed, which can increase affordability and potentially secure better loan terms. It also impacts your Loan-to-Value (LTV) ratio.
Interest Rate: The annual interest rate significantly affects your monthly mortgage payment. Even small differences in interest rates can lead to substantial differences in the total amount paid over the life of the loan.
Loan Term: The duration of the loan (e.g., 15, 30 years) impacts your monthly payment. Longer terms result in lower monthly payments but higher overall interest paid, while shorter terms have higher monthly payments but less interest paid over time.
How the Calculation Works (Simplified):
This calculator uses common lending guidelines to estimate affordability. A typical guideline is that your total housing costs (including principal, interest, property taxes, homeowner's insurance, and potentially HOA fees – often called PITI) should not exceed a certain percentage of your gross monthly income (often around 28%), and your total debt obligations (including the potential mortgage payment) should not exceed another percentage (often around 36% – 43%). This calculator focuses on estimating the maximum mortgage principal you might qualify for, assuming these DTI ratios.
Disclaimer: This calculator provides an estimate only and should not be considered financial advice. Actual loan approval amounts depend on a lender's specific underwriting criteria, credit score, employment history, and other financial factors. It's always recommended to speak with a mortgage professional for personalized guidance.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebtPayments) || monthlyDebtPayments < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Assumptions based on common lending guidelines (can be adjusted)
var maxHousingCostRatio = 0.28; // Front-end ratio: Max PITI is 28% of gross monthly income
var maxTotalDebtRatio = 0.36; // Back-end ratio: Max total debt (PITI + other debts) is 36% of gross monthly income
var grossMonthlyIncome = annualIncome / 12;
var maxAllowableHousingPayment = grossMonthlyIncome * maxHousingCostRatio;
var maxAllowableTotalDebt = grossMonthlyIncome * maxTotalDebtRatio;
// Maximum monthly mortgage payment allowed (P&I only, excluding taxes/insurance for this simplified calculation)
// We will assume taxes and insurance add a buffer or are included in the broader DTI.
// For simplicity, we'll calculate the maximum P&I based on the total debt ratio, subtracting existing debts.
var maxAllowableMortgagePAndI = maxAllowableTotalDebt – monthlyDebtPayments;
// Use the lower of the two maximums for a more conservative estimate
var maxMonthlyMortgagePayment = Math.min(maxAllowableHousingPayment, maxAllowableMortgagePAndI);
if (maxMonthlyMortgagePayment 0) {
maxLoanPrincipal = maxMonthlyMortgagePayment * (Math.pow(1 + monthlyInterestRate, loanTermMonths) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTermMonths));
} else {
// Handle zero interest rate case (unlikely but for completeness)
maxLoanPrincipal = maxMonthlyMortgagePayment * loanTermMonths;
}
var estimatedMaxHomePrice = maxLoanPrincipal + downPayment;
// Format results for display
var formattedMaxLoanPrincipal = maxLoanPrincipal.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedEstimatedMaxHomePrice = estimatedMaxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxMonthlyMortgagePayment = maxMonthlyMortgagePayment.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = `
Estimated Affordability:
Estimated Maximum Mortgage Principal (Loan Amount): ${formattedMaxLoanPrincipal}
Estimated Maximum Home Price You Can Afford: ${formattedEstimatedMaxHomePrice}
(Based on a maximum monthly Principal & Interest payment of approximately ${formattedMaxMonthlyMortgagePayment}, before taxes and insurance.)
This estimate assumes common DTI ratios (approx. 28% housing, 36% total debt). Your actual borrowing capacity may vary.
`;
}