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How Much Home Can I Afford Calculator

How Much Home Can I Afford Calculator

Calculator developed by

Use our How Much Home Can I Afford Calculator to determine what price home you can buy based on your down payment and the mortgage amount you can afford. The calculator uses your monthly gross income and debt payments to determine the loan amount you can afford, which is added to your down payment to show you the estimated home price you can afford. We encourage you to evaluate different scenarios to find the property price, mortgage, monthly payment and total housing expense that meet your budget and financial goals.

Inputs

The money saved for your down payment
Please Enter Mortage Amount
Indicates how frequently you are paid
Please Select How Often Are You Paid
Your income per pay period before subtracting taxes and other deductions
Please Enter Net Income Per Pay Period
It looks like you may have inputted your annual income instead of your monthly net income. Please confirm you have inputted the correct net income amount.
X
Your income per pay period before subtracting taxes and other deductions
Please Enter Total Monthly Debt Payments
It looks like you may have inputted your total debt balance instead of your total monthly debt payments. Please confirm you have inputted your total monthly debt payments.
X
The current interest rate for a 30 year fixed rate mortgage is approximately 3.875%
Please Select Mortgage Rate
The length, in years, of the mortgage. The most common mortgage term is 30 years
Please Select Loan Length (Years)
Submit Valid Info to Compare Lenders and Save Money!When you provide valid personal info we may connect you with lenders which enables you to compare mortgage proposals and find the mortgage that is right for you. Click calculator for a version of this calculator that does not require personal info
 
Please Enter Your First & Last Name
Please Enter a Valid First Name
Please Enter a Valid Last Name
 
Please Enter Your Phone Number
Please Enter a Valid Phone
Please Enter Your Email
Please Enter a Valid Email
Your credit score to the best of your knowledge
Please Select Credit Score

Outputs

The output provided represents an estimate only. Property tax and insurance rates vary by state, county and property

How Our How Much Home Can I Afford Calculator Works

Input your down payment, gross income and monthly debt expense information to determine what price home you can afford to buy.  Additional calculator inputs include your mortgage rate and loan term. Our How Much Home Can I Afford Calculator uses the following key inputs:

Down Payment. Your down payment is an important factor because the more money you put down, the more home you can buy or the lower the mortgage amount you need.

Gross Income. Lenders use your gross income to determine what size mortgage you qualify for.  The higher your gross income, the higher the loan amount you can afford.

Monthly Debt Payments. This is another factor lenders use to assess what size loan you can afford.  The higher your monthly debt payments, the lower the mortgage you qualify for. This figure includes payments for credit cards as well as car, student and personal loans but excludes your current housing expense. Please input your monthly debt payment and not your current loan balance.

Mortgage Rate.  The lower your rate, the higher the mortgage amount you qualify for.

Loan Length.  The longer your loan, the lower your monthly payment and higher the loan amount you can afford.

Our calculator enables you to understand the following outputs:

Estimated Home You Can Afford.  Your mortgage amount plus your down payment equals the estimated price of the home you can afford to buy.  The higher your loan amount and down payment, the higher the price home you can afford.

Loan-to-Value (LTV) Ratio.  Loan-to-value (LTV) ratio is used by lenders to determine the mortgage amount and loan programs you qualify for.  Our calculator shows you your LTV ratio based on your down payment and estimated home you can afford.

Mortgage Payment.  Determine your monthly loan payment based on the mortgage amount you can afford and current interest rates.

Estimated Property Tax and Insurance.  When buying a home it is important to consider other expenses such as property tax and homeowners insurance.  Our How Much Home Can I Afford Calculator provides the estimated cost for these items based on your property value.

Total Monthly Housing Expense.  This figure includes your mortgage payment plus estimated property tax and insurance.  When determining what price home you can afford, it is important to consider total housing expense and not just your loan payment.

Other factors that determine how much house you can afford include your loan program, property type and if you are required to pay additional housing expenses such as HOA or co-op fees.

What Determines How Much Home You Can Afford?

1

What Size Mortgage You Can Afford

The most important factor that determines how much home you can afford is what size mortgage you qualify for.  Your mortgage usually represents 80% or more of the property purchase price so it is the starting point when you evaluate your housing affordability.  What size loan you qualify for is influenced by several factors including your monthly gross income, or your income before any deductions such as taxes and social security, as well as your monthly debt payments for credit cards as well as auto and student loans.  In short, lenders use your debt-to-income ratio to determine what size mortgage you can afford. The higher your gross income and lower your monthly debt payments, the higher the loan amount you qualify for. The higher your mortgage amount, the more home you can afford.  That is why it is good to have relatively low debt expense when you want to buy a home.

2

Your Down Payment

Your down payment is the second key input that affects how much home you can afford.  Simply put, the down payment is the money you contribute to buy the home. The more money you have for a down payment, the more home you can afford.  While making a 20% down payment usually qualifies you for the best loan terms, including the lowest mortgage rate, it is definitely possible to buy a home with a down payment of much less.  There are many low down payment mortgage programs that enable you to qualify with a down payment of 3.5% or less and some programs require no down payment.  You may also be able to pair a low down payment program with a grant or other borrower assistance program to purchase a home with no personal financial contribution.  Although having minimal funds for a down payment reduces how much much home you can afford, do not let that limit your options or prevent you from buying a home.  You can use our How Much Home Can I Afford Calculator to determine what price home you can buy based on different down payment amounts.

3

Your Personal and Financial Profile

Considerations such as your credit score, employment history and financial profile also influence what price home you can afford.  The higher your credit score, the lower your mortgage rate which means you qualify for a larger mortgage so you can afford more home.  Plus, if you have significant negative credit issues such as a bankruptcy or foreclosure, it can be challenging to qualify for a mortgage or you may need to use alternate loan programs or lending sources.  Lenders also usually require a two year job history and prefer steady, verifiable income.  In addition to your credit profile and employment history, lenders also evaluate your assets including your bank and brokerage accounts.  Lenders want to confirm that you have sufficient funds after you purchase the property and pay your down payment and closing costs.  Some lenders and loan programs require borrowers to maintain a minimum level of financial reserves when your loan closes. Borrowers should always check with lenders to understand their reserve requirements as keeping funds in your bank account may impact how much home you can afford.

4

The Type of Property You Are Buying

The property you want to buy -- single family home, condominium, co-op, tenancy-in-common -- also impacts how much home you can afford.  First, depending on the type of project, development or building, it may be more challenging to qualify for a mortgage on a condominium or co-op.  Lenders require relatively extensive information on the development or building and want to make sure that there are sufficient funds to pay for property upkeep and ongoing maintenance. Additionally, many condo buildings or co-ops require you to pay monthly homeowners association (HOA) fees or dues.  The higher these fees or dues, the lower the mortgage amount you can afford.  For example, the price of condo you can afford may be significantly lower than the price of single family home you can afford.  Lenders count these monthly fees as a debt expense so they can really cut into the mortgage you qualify for.  You should always consider the property type and any extra fees when you determine what price home you can afford.

5

Your Personal Financial Budget

The most important consideration when you buy a home is to make sure you can afford the home based on your personal financial budget.  You may have a lot of money saved for a down payment and can qualify for a large mortgage but you do not want to get in over your head as a homeowner. In addition to your monthly mortgage payment it is also important to consider other housing-related expenses such as property tax, homeowners insurance and mortgage insurance, if applicable. You should also keep in mind any costs to repair and maintain the property as ongoing upkeep can be more expensive than you think.  One of the biggest mistakes people make is to buy a home they cannot afford so it is important to understand total monthly housing expense and not just your monthly payment when you buy a home.  Our How Much Home Can I Afford Calculator shows you the total monthly housing expense so you can evaluate if buying a home fits within your budget. 

6

Your Mortgage Program

Many people think they cannot afford to buy a home because they do not have enough money saved for a down payment and other people think you need to put 20% down to buy a home.  These ideas stop many people from even considering buying a home.  While making a 20% down payment helps you afford more home and potentially lowers your mortgage rate it is definitely possible to buy a home with a lower down payment.  A number no or low down payment programs including the FHA, VA, USDA, HomeReady and Home Possible programs enable you to buy a home with a down payment ranging from zero (VA, USDA) to 3.5% (FHA).  You must be eligible for these programs and they apply qualification guidelines but they can be very helpful if you have minimal funds saved for a down payment. We encourage you to use our How Much Home Can I Afford Calculator to see what price home you can buy even with a low or no down payment.

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Current Mortgage Rates as of March 26, 2019
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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information on rates and product details.
While we pride ourselves on the quality and breadth of the FREEandCLEAR mortgage calculators please note that they should be used for informational purposes only. Our calculators rely on assumptions by us and inputs and assumptions provided by you, which may be inaccurate. The outputs from our calculators are estimates only and should not be used as the sole basis for making any financial decisions. Always consult multiple financial professionals when determining the mortgage size and program that is appropriate for you.

More FREEandCLEAR Mortgage Resources

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How Much Home Can I Afford Explanation and Example

Review a detailed explanation of how to determine what price home you can buy based on your down payment and loan amount including informative examples.

Mortgage Calculators

Mortgage Qualification Calculator

Determine what size mortgage you can afford based on your monthly income and debt as well as other factors. Knowing what size loan you qualify for is your first step to determine how much home you can afford.

Programs

Total Monthly Housing Expense

Understand all of the components of total monthly housing expense when you own a home including your mortgage payment, which is comprised of principal and interest, taxes, insurance and other potential costs.  Knowing the total cost of owning a home helps you better evaluate how much home you can afford.

Resources

Mortgage Cheat Sheet

Our cheat sheet takes you through the mortgage process from loan application until loan closing.  Understand the steps you can take so that the mortgage process goes as smoothly as possible.

Mortgage Expert Insights

No and Low Down Payment Mortgage Programs

Review over 20 no and low down payment programs to understand the financing option that is right for you.

Sources

Home Affordability: http://myhome.freddiemac.com/buy/your-finances.html

About the calculator developer

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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