Understanding how much house you can afford is a crucial first step in the home-buying process. This mortgage affordability calculator helps you estimate the maximum mortgage amount you might qualify for, based on your income, debts, and down payment. Remember, this is an estimate, and your actual loan approval will depend on a lender's full underwriting process, including credit score, employment history, and other financial factors.
Understanding Mortgage Affordability
Mortgage affordability is determined by a lender's assessment of your ability to repay a loan. Two common metrics lenders use are the Debt-to-Income (DTI) ratio and the principal, interest, taxes, and insurance (PITI) payment.
Debt-to-Income Ratio (DTI): This ratio compares your total monthly debt payments (including the estimated mortgage payment) to your gross monthly income. Lenders typically prefer a DTI of 43% or lower, though this can vary. A lower DTI indicates a lower risk for the lender.
Principal, Interest, Taxes, and Insurance (PITI): This represents the total monthly cost of homeownership. When calculating affordability, lenders consider your ability to handle this payment on top of your other existing debts.
How this Calculator Works: This calculator estimates your maximum affordable mortgage payment based on common lending guidelines. It takes your gross monthly income and subtracts your existing monthly debt obligations. It then applies a typical maximum DTI percentage to the remaining income to determine the maximum monthly mortgage payment you might afford. From this monthly payment, along with the interest rate and loan term you provide, it estimates the maximum loan amount you could take out. Your down payment is then added to this loan amount to give you an idea of the maximum home price you might be able to afford.
Important Considerations:
Credit Score: A higher credit score generally leads to better interest rates and a higher chance of loan approval.
Loan Types: Different loan programs (e.g., FHA, VA, Conventional) have varying qualification requirements and down payment options.
Closing Costs: Remember to budget for closing costs, which can be significant and are separate from your down payment.
Property Taxes and Homeowner's Insurance: These costs can vary greatly by location and property type.
Private Mortgage Insurance (PMI): If your down payment is less than 20% on a conventional loan, you'll likely have to pay PMI, which adds to your monthly housing cost.
This calculator is a helpful tool for initial planning, but always consult with a mortgage professional for personalized advice and pre-approval.
function calculateAffordability() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").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(monthlyIncome) || isNaN(existingDebts) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (monthlyIncome <= 0 || existingDebts < 0 || downPayment < 0 || interestRate <= 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter positive values for income, loan term, and interest rate, and non-negative values for debts and down payment.";
return;
}
// Common lender guideline: Max DTI of 43%
var maxDTI = 0.43;
var maxMonthlyMortgagePayment = (monthlyIncome * maxDTI) – existingDebts;
if (maxMonthlyMortgagePayment 0) {
maxLoanAmount = maxMonthlyMortgagePayment * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
// If interest rate is 0, loan amount is simply monthly payment * number of payments
maxLoanAmount = maxMonthlyMortgagePayment * numberOfPayments;
}
var maxAffordableHomePrice = maxLoanAmount + downPayment;
resultDiv.innerHTML = "