Use this calculator to estimate the maximum mortgage you can afford based on your income, debts, and desired down payment. Remember, this is an estimate, and your actual loan approval may vary based on lender policies, credit score, and other financial factors.
Understanding Mortgage Affordability
Lenders use various metrics to determine how much you can borrow. Two common ones are the Debt-to-Income (DTI) ratio and the Front-End DTI (often called the Housing Ratio).
Debt-to-Income (DTI) Ratio: This compares your total monthly debt payments to your gross monthly income. Lenders typically prefer a DTI of 43% or less, though this can vary. A lower DTI indicates you have less financial obligation relative to your income.
Front-End DTI (Housing Ratio): This compares your potential total housing costs (principal, interest, property taxes, and homeowner's insurance – often called PITI) to your gross monthly income. Lenders often look for this to be around 28% or less.
Our calculator uses a simplified approach, estimating your maximum affordable loan based on a common DTI guideline and your available income after existing debts.
Factors Affecting Affordability:
Credit Score: A higher credit score generally leads to lower interest rates and better loan terms.
Loan Type: Different loan programs (e.g., FHA, VA, Conventional) have different requirements.
Property Taxes and Homeowner's Insurance: These costs vary significantly by location and property type and will impact your monthly payment.
Private Mortgage Insurance (PMI): If your down payment is less than 20%, you'll likely have to pay PMI, adding to your monthly costs.
Interest Rates: Even small changes in interest rates can significantly impact your monthly payment and the total interest paid over the life of the loan.
This calculator provides a useful starting point for your home-buying journey. It's always recommended to speak with a mortgage lender for a pre-approval to get a precise understanding of your borrowing capacity.
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function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebt = parseFloat(document.getElementById("monthlyDebt").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
resultDiv.textContent = ""; // Clear previous results
// — Input Validation —
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebt) || monthlyDebt < 0 || // Monthly debt can be 0
isNaN(downPayment) || downPayment < 0 || // Down payment can be 0
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0) {
resultDiv.textContent = "Please enter valid positive numbers for all fields.";
return;
}
// — Calculations —
// Common DTI ratio threshold (e.g., 43%)
var maxDTI = 0.43;
// Gross monthly income
var grossMonthlyIncome = annualIncome / 12;
// Maximum allowed monthly debt payments (including potential mortgage)
var maxMonthlyDebtAllowed = grossMonthlyIncome * maxDTI;
// Amount available for mortgage payment
var mortgagePaymentBudget = maxMonthlyDebtAllowed – monthlyDebt;
if (mortgagePaymentBudget 0) {
principal = mortgagePaymentBudget * (1 – Math.pow(1 + monthlyInterestRate, -loanTermMonths)) / monthlyInterestRate;
} else { // Handle 0% interest rate (though unlikely for mortgages)
principal = mortgagePaymentBudget * loanTermMonths;
}
// Maximum affordable loan amount is the calculated principal
var maxLoanAmount = principal;
// Maximum affordable home price is the loan amount plus the down payment
var maxHomePrice = maxLoanAmount + downPayment;
// — Display Results —
var formattedMaxHomePrice = maxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMortgagePaymentBudget = mortgagePaymentBudget.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedGrossMonthlyIncome = grossMonthlyIncome.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var calculatedDTI = (maxMonthlyDebtAllowed / grossMonthlyIncome * 100).toFixed(2);
resultDiv.innerHTML = `
Estimated Maximum Affordable Home Price: ${formattedMaxHomePrice}
Estimated Maximum Loan Amount: ${formattedMaxLoanAmount}
Estimated Maximum Monthly Mortgage Payment (P&I): ${formattedMortgagePaymentBudget}
Your estimated Debt-to-Income Ratio (including potential mortgage): ~${calculatedDTI}%
(This estimate assumes a ${maxDTI * 100}% DTI limit. Property taxes, insurance, and PMI are not included in the monthly payment estimate.)
`;
}