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How Much Home Can I Afford Calculator
FREEandCLEAR Calculator

How Much Home Can I Afford Calculator

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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.
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.  Your down payment is also directly related to your loan-to-value (LTV) ratio, which is used by lenders to help determine the mortgage amount and loan programs you qualify for.  The calculator shows you your LTV ratio based on your down payment and estimated home you can afford. 
Additional calculator inputs including your mortgage rate and loan term are also important factors that affect how much home you can afford. For example, the lower your mortgage rate and longer your loan, the higher the mortgage amount and more home you can afford.  Other factors that determine house affordability include your loan program, property type and if you are required to pay additional housing expenses such as HOA or co-op fees.
We encourage you to evaluate different scenarios to find the property price, loan amount, monthly payment and total housing expense that meet your budget and financial goals.  In addition to your mortgage payment, 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 expenses based on your property value.  Remember to consider all housing costs when determining what price home you can afford.  We also offer a version of this calculator that does not require personal information.

Inputs
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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 here for a version of this calculator that does not require personal info
 
Outputs
 
 
 
 
 
The output provided represents an estimate only. Property tax and insurance rates vary by state, county and property
 
 
Rate Details*
Loan Program:  
Monthly Payment:  
APR:  
Rate:  
Points  More Info:
Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
 
Total Lender Fees:  
Loan type:  
Property Value:  
Loan to Value:  
Credit Rating:  
Date Submitted:  
Monthly Housing Payments
P & I More Info
Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
Mortgage Insurance More Info
Mortgage Insurance: The monthly cost for a policy that protects the lender in case you’re unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%.
(Estimated)
Property Tax More Info
Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ...
(Estimated)
Homeowner Insurance More Info
Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ...
(Estimated)
Homeowner Association Fee More Info
Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs.
(If Any)
Total Monthly Housing Payments
Lender Fees
Points More Info
Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
Origination Fee More Info
Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan.
Credit Report Fee More Info
Credit Report Fee: Fee charged to obtain an applicant’s credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower’s creditworthiness.
Tax Service Fee More Info
Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender.
Processing Fee More Info
Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower.
Underwriting Fee More Info
Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property’s value, and perform a risk analysis on the overall loan package.
Wire Transfer Fee More Info
Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower.
(If Any)
FHA Upfront Premium More Info
FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception.
(If any)
VA funding Fee (If any)
Flood Fee
Other Fees More Info

Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees)

The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower’s attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.

Total Lender Fees
*Actual rates and other information may vary. Sponsored results shown only include participating lenders. The information you enter on this page will only be shared with lenders you choose to contact, either by calling the phone number or requesting a quote.
Current Mortgage Rates as of November 21, 2018
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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Click here 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.

What Determines How Much Home I 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.

More FREEandCLEAR Mortgage Resources

Mortgage Guides

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.

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

Harry Jensen LinkedInLinkedIn | Email Harry JensenEmail
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