Buying a home is a significant financial decision, and understanding how much you can realistically afford is the crucial first step. A mortgage affordability calculator helps you estimate the maximum loan amount you might qualify for, based on your income, existing debts, down payment, and prevailing interest rates.
Key Factors Influencing Affordability:
Annual Income: Lenders assess your ability to repay the loan primarily based on your income. Higher income generally means greater borrowing capacity.
Existing Monthly Debt Payments: This includes payments for car loans, student loans, credit cards, and any other recurring debts. Lenders use a debt-to-income ratio (DTI) to gauge how much of your income is already committed to debt. A lower DTI indicates a better ability to handle a new mortgage payment.
Down Payment: A larger down payment reduces the loan amount needed, which can increase your affordability and may also help you secure better loan terms.
Interest Rate: The annual interest rate significantly impacts your monthly mortgage payment. Even small changes in the interest rate can affect how much you can borrow.
Loan Term: The length of the loan (e.g., 15, 30 years) also affects your monthly payments. Shorter terms mean higher monthly payments but less interest paid over the life of the loan.
How the Calculator Works:
This calculator uses a common guideline where lenders often suggest that your total housing costs (including principal, interest, property taxes, and insurance – PITI) should not exceed 28% of your gross monthly income. It also considers your existing debt obligations to calculate a maximum affordable monthly mortgage payment. From there, it estimates the maximum loan amount you could qualify for given the provided interest rate and loan term.
Disclaimer: This calculator provides an estimate for informational purposes only and does not constitute financial advice. Actual loan approval and amounts depend on lender-specific underwriting criteria, credit scores, and a full financial assessment.
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.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || isNaN(monthlyDebt) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (annualIncome <= 0 || monthlyDebt < 0 || downPayment < 0 || interestRate <= 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter positive values for income, interest rate, and loan term, and non-negative values for debt and down payment.";
return;
}
// Calculate maximum affordable monthly housing payment (approx. 28% of gross monthly income)
var grossMonthlyIncome = annualIncome / 12;
var maxHousingPayment = grossMonthlyIncome * 0.28;
// Estimate maximum monthly debt-to-income ratio (e.g., 36% – 43% is common, let's use 36% for affordability)
var maxTotalDebtPayment = grossMonthlyIncome * 0.36;
var maxMortgagePayment = maxTotalDebtPayment – monthlyDebt;
// Take the lower of the two calculated maximum mortgage payments
var affordableMonthlyMortgagePayment = Math.min(maxHousingPayment, maxMortgagePayment);
if (affordableMonthlyMortgagePayment 0) {
maxLoanAmount = affordableMonthlyMortgagePayment * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else { // Handle 0% interest rate, though unlikely for mortgages
maxLoanAmount = affordableMonthlyMortgagePayment * numberOfPayments;
}
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML =
"Estimated Maximum Monthly Mortgage Payment You Can Afford: $" + affordableMonthlyMortgagePayment.toFixed(2) + "" +
"Estimated Maximum Loan Amount: $" + maxLoanAmount.toFixed(2) + "" +
"Estimated Maximum Home Price (Loan + Down Payment): $" + estimatedMaxHomePrice.toFixed(2) + "";
}