Use this calculator to estimate how much you can potentially borrow for a mortgage based on your income, debts, and a desired monthly payment.
Understanding Mortgage Affordability
Determining how much mortgage you can afford is a crucial step in the home-buying process. It helps you set realistic expectations and avoid overextending your finances. Several factors influence your borrowing capacity, and this calculator aims to provide a preliminary estimate.
Key Factors Explained:
Annual Gross Income: This is your total income before taxes and other deductions. Lenders heavily rely on this figure to assess your ability to repay a loan.
Total Monthly Debt Payments: This includes payments for car loans, student loans, credit cards, and any other recurring debts. High existing debt can significantly reduce the amount you can borrow for a mortgage.
Down Payment: The upfront amount you pay towards the home purchase. A larger down payment reduces the loan amount needed and can lead to better interest rates and lower monthly payments.
Estimated Annual Interest Rate: The yearly percentage charged by the lender. Even small changes in interest rates can have a substantial impact on your monthly payments and the total cost of the loan over time.
Loan Term: The duration over which you agree to repay the loan, typically 15, 20, or 30 years. Longer terms result in lower monthly payments but more interest paid overall.
Maximum Desired Monthly Mortgage Payment: This is the absolute highest amount you are comfortable paying each month for your mortgage's principal and interest. It's a crucial personal financial boundary.
How the Calculator Works:
This calculator uses a common guideline that a borrower's total housing costs (including principal, interest, property taxes, and insurance) should not exceed 28% of their gross monthly income, and their total debt (including housing costs) should not exceed 36% of their gross monthly income. For simplicity, this calculator focuses on the principal and interest portion of the mortgage payment, assuming taxes and insurance are separate or are accounted for within your "Maximum Desired Monthly Mortgage Payment".
The calculator first determines your maximum allowable total monthly debt based on the 36% rule. It then subtracts your existing monthly debt payments to find the maximum you can allocate towards a mortgage payment. Using the loan term and interest rate, it calculates the maximum loan amount you can afford with that monthly payment. Finally, it adds your down payment to estimate the maximum home price you might afford.
Important Considerations:
This calculator provides an ESTIMATE. Actual loan approval depends on many factors, including your credit score, lender policies, employment history, and the specific property you wish to purchase.
Property taxes, homeowners insurance, and private mortgage insurance (PMI), if applicable, are NOT included in the principal and interest calculation but will be part of your total monthly housing expense. You must factor these into your overall budget.
It's always recommended to speak with a mortgage lender or financial advisor for personalized advice.
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 maxMonthlyPayment = parseFloat(document.getElementById("maxMonthlyPayment").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(annualIncome) || annualIncome <= 0 ||
isNaN(monthlyDebt) || monthlyDebt < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm <= 0 ||
isNaN(maxMonthlyPayment) || maxMonthlyPayment <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// Calculate maximum total monthly debt (36% rule)
var grossMonthlyIncome = annualIncome / 12;
var maxTotalMonthlyDebt = grossMonthlyIncome * 0.36;
// Calculate maximum allowable monthly mortgage payment (P&I)
var maxMortgagePayment = maxTotalMonthlyDebt – monthlyDebt;
// Ensure the calculated max mortgage payment doesn't exceed the user's desired max
var actualMaxMonthlyPayment = Math.min(maxMonthlyPayment, maxMonthlyPayment); // User's desire is the cap here
if (actualMaxMonthlyPayment 0) {
// Using the formula for the present value of an annuity
maxLoanAmount = actualMaxMonthlyPayment * (1 – Math.pow(1 + monthlyInterestRate, -numberOfPayments)) / monthlyInterestRate;
} else {
// Handle zero interest rate case (unlikely but for completeness)
maxLoanAmount = actualMaxMonthlyPayment * numberOfPayments;
}
// Calculate estimated maximum home price
var estimatedMaxHomePrice = maxLoanAmount + downPayment;
// Display results
var affordabilityMessage = "
Estimated Affordability Results:
";
affordabilityMessage += "Gross Monthly Income: $" + grossMonthlyIncome.toFixed(2) + "";
affordabilityMessage += "Maximum Recommended Total Monthly Debt Payments: $" + maxTotalMonthlyDebt.toFixed(2) + "";
affordabilityMessage += "Maximum Amount You Can Allocate Towards Mortgage (P&I): $" + actualMaxMonthlyPayment.toFixed(2) + "";
affordabilityMessage += "Estimated Maximum Loan Amount: $" + maxLoanAmount.toFixed(2) + "";
affordabilityMessage += "Estimated Maximum Home Price You Could Afford (with Down Payment): $" + estimatedMaxHomePrice.toFixed(2) + "";
affordabilityMessage += "Note: This is an estimate. Actual mortgage approval depends on lender, credit score, and other factors. Property taxes, insurance, and PMI are not included here.";
resultDiv.innerHTML = affordabilityMessage;
}