Mortgage Affordability Calculator
.calculator-container {
font-family: sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 8px;
box-shadow: 0 2px 4px rgba(0, 0, 0, 0.1);
}
.calculator-container h2 {
text-align: center;
margin-bottom: 20px;
color: #333;
}
.calculator-inputs {
display: grid;
grid-template-columns: repeat(auto-fit, minmax(250px, 1fr));
gap: 15px;
}
.form-group {
display: flex;
flex-direction: column;
}
.form-group label {
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.form-group input {
padding: 10px;
border: 1px solid #ddd;
border-radius: 4px;
font-size: 1em;
}
.form-group input:focus {
outline: none;
border-color: #007bff;
box-shadow: 0 0 0 0.2rem rgba(0, 123, 255, 0.25);
}
.calculator-container button {
grid-column: 1 / -1;
padding: 12px 20px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 1.1em;
cursor: pointer;
transition: background-color 0.3s ease;
}
.calculator-container button:hover {
background-color: #0056b3;
}
.calculator-result {
margin-top: 25px;
padding: 15px;
background-color: #e9ecef;
border: 1px solid #ced4da;
border-radius: 4px;
text-align: center;
font-size: 1.1em;
color: #333;
}
.calculator-result p {
margin: 0;
font-weight: bold;
}
.calculator-result span {
color: #28a745;
}
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var annualInterestRate = 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(monthlyDebtPayments) || isNaN(downPayment) || isNaN(annualInterestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
// Lender Debt-to-Income (DTI) Ratios – common guidelines, can vary
// Front-end DTI (Housing) often around 28% of gross monthly income
// Back-end DTI (Total Debt) often around 36% of gross monthly income
var maxHousingRatio = 0.28;
var maxTotalDebtRatio = 0.36;
var grossMonthlyIncome = annualIncome / 12;
// Calculate maximum allowed monthly housing payment (PITI: Principal, Interest, Taxes, Insurance)
var maxMonthlyHousingPayment = grossMonthlyIncome * maxHousingRatio;
// Calculate maximum allowed total monthly debt payments
var maxTotalMonthlyDebt = grossMonthlyIncome * maxTotalDebtRatio;
// Determine the maximum monthly mortgage payment the borrower can afford (excluding PITI components other than P&I)
// We'll assume taxes, insurance, and PMI are roughly 1% of the loan value annually, or 1/12th of 1% monthly.
// This is a simplification. In reality, these are separate calculations.
// For affordability, we focus on Principal & Interest (P&I) portion.
var maxMonthlyPI = maxMonthlyHousingPayment – (grossMonthlyIncome * (maxTotalDebtRatio – maxHousingRatio)) ; // This accounts for the difference between front and back end DTI to estimate P&I portion
if (maxMonthlyPI < 0) {
maxMonthlyPI = maxMonthlyHousingPayment – monthlyDebtPayments; // Fallback if total debt ratio is too tight
}
maxMonthlyPI = Math.min(maxMonthlyPI, maxTotalMonthlyDebt – monthlyDebtPayments);
if (maxMonthlyPI 0) {
maxLoanAmount = maxMonthlyPI * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else {
// Handle 0% interest rate case (unlikely for mortgages but for completeness)
maxLoanAmount = maxMonthlyPI * numberOfPayments;
}
var maxHomePrice = maxLoanAmount + downPayment;
// Format results
var formattedMaxLoanAmount = maxLoanAmount.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMaxHomePrice = maxHomePrice.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedMonthlyPI = maxMonthlyPI.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = "Estimated Maximum Loan Amount:
" + formattedMaxLoanAmount + "" +
"Estimated Maximum Affordable Home Price:
" + formattedMaxHomePrice + "" +
"(Based on estimated maximum monthly Principal & Interest: " + formattedMonthlyPI + ")";
}
Understanding Mortgage Affordability
Determining how much house you can afford is a crucial step in the home-buying process. It involves more than just looking at your desired monthly payment; lenders consider several financial factors to assess your borrowing capacity. This calculator helps estimate your maximum affordable home price based on common lending guidelines.
Key Factors in Mortgage Affordability:
- Annual Income: This is your gross income before taxes. Lenders use this as the primary indicator of your ability to repay a loan.
- Existing Monthly Debt Payments: This includes payments for credit cards, auto loans, student loans, personal loans, and any other recurring debts. It does NOT typically include current rent or utilities.
- Down Payment: The amount of money you can put down upfront. A larger down payment reduces the loan amount needed and can improve your chances of approval and loan terms.
- Interest Rate: The annual interest rate on the mortgage significantly impacts your monthly payment and the total interest paid over the life of the loan.
- Loan Term: The length of the mortgage, usually 15 or 30 years. Longer terms result in lower monthly payments but more interest paid overall.
How Lenders Assess Affordability (Debt-to-Income Ratio – DTI):
Lenders primarily use Debt-to-Income (DTI) ratios to determine how much they are willing to lend you. There are generally two DTI ratios:
- Front-End Ratio (Housing Ratio): This compares your potential total monthly housing costs (Principal, Interest, Property Taxes, Homeowner's Insurance, and potentially HOA dues and PMI – often referred to as PITI) to your gross monthly income. A common guideline is that this should not exceed 28% of your gross monthly income.
- Back-End Ratio (Total Debt Ratio): This compares your total monthly debt obligations (including the potential mortgage payment AND all other recurring debts like car loans, student loans, credit card minimums) to your gross monthly income. A common guideline is that this should not exceed 36% of your gross monthly income.
This calculator uses simplified versions of these DTI guidelines to estimate your maximum affordable loan amount and, consequently, your maximum affordable home price, factoring in your down payment. Keep in mind that actual lending criteria can vary by lender, loan type, credit score, and market conditions.
Disclaimer: This calculator provides an estimate for informational purposes only and does not constitute a loan approval or financial advice. Consult with a mortgage professional for personalized guidance.