Your Estimated Maximum Mortgage
Enter your details above to see your estimated maximum mortgage amount.
Understanding Your Mortgage Affordability
Buying a home is a significant financial decision, and understanding how much you can realistically afford for a mortgage is the crucial first step. This mortgage affordability calculator is designed to give you a quick estimate based on your income, existing debts, down payment, and loan terms.
Key Factors Affecting Your Mortgage Affordability
Several factors influence the maximum mortgage amount you can borrow. Lenders typically look at a combination of these to determine your borrowing capacity:
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Gross Income: This is your total income before taxes and other deductions. Lenders use this as the primary indicator of your ability to repay a loan. A higher income generally allows for a larger loan.
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Existing Debts: This includes all your monthly debt obligations, such as car loans, student loans, personal loans, and credit card payments. High existing debt payments reduce the amount of income available for a mortgage, thus lowering your affordability.
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Down Payment: The larger your down payment, the less you need to borrow, which directly increases your affordability for a given monthly payment. A substantial down payment can also help you avoid private mortgage insurance (PMI) and secure better interest rates.
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Interest Rate: The annual interest rate on your mortgage significantly impacts your monthly payments and the total cost of the loan. Even small changes in interest rates can affect how much you can borrow.
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Loan Term: This is the length of time you have to repay the mortgage, typically 15 or 30 years. A longer loan term will result in lower monthly payments but more interest paid over the life of the loan, potentially allowing for a higher principal amount. A shorter term means higher monthly payments but less interest paid overall.
How the Calculator Works
This calculator uses a common rule of thumb that many lenders consider. Generally, your total housing costs (principal, interest, property taxes, homeowner's insurance, and potentially HOA fees) should not exceed 28% of your gross monthly income. Additionally, your total debt payments (including the estimated mortgage payment) should not exceed 36% of your gross monthly income.
The calculator first determines your maximum affordable monthly mortgage payment based on your income and existing debts. Then, it works backward using the interest rate and loan term to estimate the maximum loan principal you can afford. Finally, it subtracts your down payment to provide an estimated maximum mortgage affordability.
Example Scenario
Let's consider an example:
- Annual Gross Income: $80,000
- Monthly Debt Payments (excluding mortgage): $400
- Down Payment: $20,000
- Estimated Annual Interest Rate: 6.5%
- Loan Term: 30 years
Using our calculator with these figures, you might find that you can afford a mortgage of approximately $233,000. This means with your $20,000 down payment, you could potentially purchase a home in the range of $253,000. Remember, this is an estimate, and actual loan approval will depend on a lender's full underwriting process.
Disclaimer: This calculator provides an estimation for informational purposes only. It does not constitute financial advice, and actual mortgage affordability may vary based on individual lender policies, credit scores, market conditions, and other factors. Always consult with a qualified mortgage professional for personalized advice.
function calculateMortgageAffordability() {
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var existingDebts = parseFloat(document.getElementById("existingDebts").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(existingDebts) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (annualIncome <= 0 || interestRate < 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Income, interest rate, and loan term must be positive values.";
return;
}
// Rule of thumb: PITI (Principal, Interest, Taxes, Insurance) not more than 28% of gross monthly income
// Rule of thumb: Total debt (including PITI) not more than 36% of gross monthly income
var grossMonthlyIncome = annualIncome / 12;
var maxTotalDebtPayment = grossMonthlyIncome * 0.36;
var affordableMortgagePayment = Math.min(maxTotalDebtPayment – existingDebts, grossMonthlyIncome * 0.28);
if (affordableMortgagePayment 0) {
maxLoanAmount = affordableMortgagePayment * (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
} else { // Handle 0% interest rate scenario
maxLoanAmount = affordableMortgagePayment * numberOfPayments;
}
var totalAffordablePurchasePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML =
"
Estimated Maximum Monthly Mortgage Payment (P&I): $" + affordableMortgagePayment.toFixed(2) + "" +
"
Estimated Maximum Loan Amount: $" + maxLoanAmount.toFixed(2) + "" +
"
Estimated Maximum Purchase Price (with your down payment): $" + totalAffordablePurchasePrice.toFixed(2) + "" +
"
Note: This excludes property taxes, homeowner's insurance, and potential HOA fees. These will increase your actual total monthly housing cost.";
}
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