Understanding how much you can afford for a mortgage is a crucial first step in the home-buying process. This mortgage affordability calculator helps you estimate your potential borrowing power based on your income, debts, and desired down payment. By inputting these figures, you can get a clearer picture of the price range you should be looking at.
How Mortgage Affordability Works
Lenders assess your ability to repay a loan by looking at several factors:
Gross Monthly Income: This is your total income before taxes and deductions. Lenders typically want your total housing expenses (mortgage principal and interest, property taxes, homeowner's insurance, and any HOA dues) to be no more than 28% of your gross monthly income.
Debt-to-Income Ratio (DTI): This ratio compares your total monthly debt payments (including the proposed mortgage payment, car loans, student loans, credit card minimum payments, etc.) to your gross monthly income. Most lenders prefer a DTI of 36% or less, though some may go up to 43% or even higher depending on other factors like your credit score and down payment.
Down Payment: A larger down payment reduces the loan amount, making you a less risky borrower and potentially lowering your interest rate.
Interest Rate: Even a small difference in interest rate can significantly impact your monthly payment and the total interest paid over the life of the loan.
Loan Term: The length of the loan (e.g., 15, 20, or 30 years) affects your monthly payment. Shorter terms usually have higher monthly payments but less interest paid overall.
This calculator uses common lending guidelines to provide an estimate. It's important to remember that this is a preliminary tool, and your actual approved loan amount may vary based on the specific lender's criteria, your credit history, and other financial details.
Your Estimated Mortgage Affordability:
function calculateAffordability() {
var grossMonthlyIncome = parseFloat(document.getElementById("grossMonthlyIncome").value);
var monthlyDebtPayments = parseFloat(document.getElementById("monthlyDebtPayments").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTermYears").value);
var resultDiv = document.getElementById("result");
var affordabilityDetailsDiv = document.getElementById(" affordabilityDetails");
resultDiv.innerHTML = ""; // Clear previous results
affordabilityDetailsDiv.innerHTML = "";
if (isNaN(grossMonthlyIncome) || grossMonthlyIncome <= 0 ||
isNaN(monthlyDebtPayments) || monthlyDebtPayments < 0 ||
isNaN(downPayment) || downPayment < 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTermYears) || loanTermYears <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// — Calculations —
// Rule of thumb: Max PITI (Principal, Interest, Taxes, Insurance) is 28% of gross monthly income
var maxPITI = grossMonthlyIncome * 0.28;
// Rule of thumb: Total DTI (including PITI) is 36% of gross monthly income
var maxTotalDebtPayment = grossMonthlyIncome * 0.36;
var maxMonthlyMortgagePaymentOnly = maxTotalDebtPayment – monthlyDebtPayments;
// Use the lower of the two affordability metrics
var maxAffordableMonthlyPayment = Math.min(maxPITI, maxMonthlyMortgagePaymentOnly);
// If maxAffordableMonthlyPayment is negative, it means existing debts are too high
if (maxAffordableMonthlyPayment 0 && numberOfPayments > 0) {
// Rearrange formula to solve for P: P = M [ (1 + i)^n – 1] / [ i(1 + i)^n ]
var numerator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var denominator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
if (denominator > 0) {
maxLoanAmount = maxAffordableMonthlyPayment * (numerator / denominator);
}
}
// Calculate maximum home price
var maxHomePrice = maxLoanAmount + downPayment;
// Display results
resultDiv.innerHTML = "
Maximum Affordable Monthly Mortgage Payment (P&I): $${maxAffordableMonthlyPayment.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,')}
Estimated Maximum Loan Amount: $${maxLoanAmount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,')}
Maximum Home Price = Loan Amount + Down Payment: $${maxHomePrice.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,')}
Note: This estimate does not include property taxes, homeowner's insurance, or HOA dues, which will increase your total monthly housing cost (PITI). Lenders typically cap PITI at 28% of gross monthly income and total debt (including PITI) at 36% of gross monthly income.
`;
}