The affordability calculator can be used to determine a suitable mortgage amount based on your budget. Enter your income, monthly debts, and downpayment to determine how much you can afford to buy a house.

Factors That Impact Affordability

The factors that determine affordability include your income, debts, down payment, and other financial factors. The interest rate you receive will also affect how much house you can afford. A lower interest rate could result in a significantly lower monthly mortgage payment. Your financial situation can be affected by your spending habits and savings goals. Pre-qualification for home loans is a good way to establish a housing budget.

How Can You Determine Affordability?

The Affordability calculator allows you to customize your payment details and offers helpful suggestions in each area. Calculate your monthly income, down payment, and monthly debts to determine your affordability. You can also use your estimated monthly payment and downpayment amount.

Advanced filters can help you get a better idea of the affordability of your house. These include homeowner's insurance amounts, property taxes, HOA dues, and HOA fees. Learn more about our calculator to determine your ideal housing budget.

An Annual Income

This is the total amount of money that you have earned in a year, before taxes and other deductions. This amount is found on all W2 forms. Add the incomes of all co-borrowers willing to contribute to your mortgage to get your annual income.

Total Monthly Debts

These are your monthly expenses, such as student loans or car payments. If necessary, you can adjust this amount in our affordability calculator. For example, your monthly debt will amount to $300 if you have $250 per month on your car and $50 on your credit cards.

Deposit Payment

What amount of money are you required to put down upfront to purchase a house? Most home loans require at least a 3% down payment. A 20% down payment will help you lower your monthly mortgage payments, avoid private mortgage insurance, increase your affordability, and reduce your monthly costs. A downpayment of 3% for a $250,000 home is $7,500. A downpayment of 20% costs $50,000.

Debt-To-Income Ratio (DTI)

Divide your gross monthly income by your monthly debt payments. This percentage is shown as a percentage. This is an indicator that lenders use to determine your ability to repay debt and pay monthly payments. Our affordability calculator will suggest a default DTI of 36%. Our DTI Calculator will give you an estimate of your debt to income ratio.

Interest Rate

In exchange for a loan, a lender charges a borrower. The interest rate is typically expressed as an annual percentage of the loan amount. The borrower pays the lender with interest over a set time period until the loan is completely paid off. Our affordability calculator uses the current average national mortgage interest rate. Credit score, down payment, and other factors will affect your interest rates. Calculate your mortgage interest rate.

Lender Term

The length of time you agree to repay your home loan. A mortgage term of 30 years or 360 monthly is the most common. However, different terms may be available depending on which type of home loan you choose. In addition, you can modify your loan term with the advanced options in the affordability calculator.

Property Tax

If you own a house, annual property taxes will be due. They are calculated based on either the assessed property value or the purchase price. These factors can affect your ability to pay for the home. In addition, the tax rate you pay will vary depending on where you live and what county it is in. You can alter this amount by using the advanced options. Get pre-qualified by a lender to get a better estimate of your total monthly payment.

Homeowner's Insurance

Also called homeowner's insurance, this type of property insurance covers a private residence. To obtain a loan, a homeowner's insurance policy (HOI) is required. Your home loan cost will depend on where you live, your coverage, and whether you qualify for any discounts. For every $100,000 in home value, homeowner's insurance typically costs $35 per monthly. Consult your agent for exact costs. You can modify the default value of the calculator by using the advanced options.

Private Mortgage Insurance (PMI)

Many lenders require private mortgage insurance if the borrower has less than a 20% downpayment. PMI protects lenders against losses that may occur if a borrower defaults on a mortgage loan. The down payment amount and home price are the basis for the PMI calculation. You can choose to add or remove PMI from the affordability calculator's advanced options.

Contributions To The Homeowner's Association

The homeowner's association (HOA) manages some communities, such as condominiums and townhomes. It maintains common areas and enforces rules. The HOA fees that you pay each month can impact your affordability. You can edit this number in the affordability calculator advanced options.

What Is The Maximum Mortgage Amount I Can Get?

To determine how much money they will lend, lenders use a pre-qualification process. This takes into account your income and debt. After completing a preliminary assessment, lenders will send you a pre-qualification letter explaining how much mortgage you're eligible for. To confirm your financial ability, get pre-qualified by a lender.