Use our Mortgage Qualification Calculator to determine what size mortgage you qualify for based on your monthly gross income and debt expenses. Many factors affect what size mortgage you can afford including your credit profile, interest rate, loan type and length. We recommend that you evaluate multiple scenarios to understand the mortgage amount, monthly payment and total housing expense you can afford based on your personal and financial profile.Watch our Mortgage Qualification Calculator "How To" video
Our Mortgage Qualification Calculator uses your monthly gross income and debt payments to determine what size mortgage you qualify for based on current interest rates and the length of your loan. Our calculator uses the following inputs:
Gross Income. Our calculator uses your monthly gross income, which is your income before any deductions such as taxes or social security, to determine what size mortgage you can afford. The higher your gross income, the larger the mortgage you qualify for.
Monthly Debt Payments. 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. For example if you pay $250 per month on a credit card with a $5,000 balance, you input $250 in your total monthly debt payments field. The higher your monthly debt payments, the lower the mortgage you qualify for.
Mortgage Rate. The lower the interest rate, the higher the loan amount you qualify for.
Mortgage Term. The longer your loan, the lower your monthly payment and higher the mortgage amount you qualify for.
Our Mortgage Qualification Calculator enables you to understand the following outputs:
Estimated Mortgage Amount You Qualify For. Understand the mortgage you can afford based on your income, debt and other factors. Even a small change in your inputs can have a significant impact on mortgage qualification.
Mortgage Payment. Determine your monthly loan payment based on the mortgage amount you qualify for, current interest rates and the length of your loan.
Estimated Property Tax and Insurance. In addition to your mortgage payment, it is important to consider other expenses such as property tax and homeowners insurance. These costs vary based on property value and location.
Total Monthly Housing Expense. This figure includes your mortgage payment plus estimated property tax and homeowners insurance. Use our calculator to understand the total monthly housing expense that you are comfortable with based on your financial budget.
Your credit score is one of the most important factors that determines your ability to qualify for a mortgage. Lenders typically require borrowers to have a minimum credit score of 620 although certain mortgage programs permit lower scores. Additionally, the higher your credit score, the lower your mortgage rate and the lower your credit score, the higher your mortgage rate. You can use our mortgage qualification calculator to understand how your mortgage rate impacts what size loan you can afford. Borrowers should check their credit score six-to-twelve months before applying for a mortgage to identify and address any issue in their credit profile.
Your debt-to-income ratio represents the maximum amount of your monthly gross income that you can spend on total monthly housing expense (mortgage payment plus property tax, homeowners insurance and other applicable housing expenses) plus monthly debt payments such as auto, student and credit card loans. Lenders typically apply a maximum borrower debt-to-income ratio of 43% to 50% to determine what size mortgage you qualify for, although some lenders and mortgage programs apply higher or lower ratios. Borrowers seeking to maximize their mortgage amount may want to pay down their monthly debt before applying for a mortgage to improve their debt-to-income ratio. Our mortgage qualification calculator applies a debt-to-income ratio to determine what size mortgage you can afford.
Lenders usually require that borrowers have two years of continuous employment history before you apply for a mortgage, unless you recently graduated from college. Additionally, if you have changed jobs recently and your new job has an initial probation period the lender may wait until the end of the probation period before approving you for a mortgage. Finally, self-employed borrowers are usually required to provide additional documentation and some lenders may not offer mortgages to self-employed borrowers. Please note that lenders have discretion over how they apply the borrowers employment history guideline.
Lenders also require that borrower provide two years of residence history when you apply for a mortgage. Your residence history includes properties that you have lived in that you have both owned and rented. If you have not owned or rented a home prior to applying for a mortgage (for example if you were living with a relative) it can be challenging to qualify for a mortgage. Borrowers should be sure to understand a lenders residence history requirement before applying for a mortgage.
Lenders usually require borrowers to make a down payment of 10% to 20% of the property purchase price to qualify for a mortgage, although there are several mortgage programs that enable you to buy a home with a low or no down payment. Saving money for a down payment is one of the biggest challenges to buying a home even for borrowers with good credit scores and steady jobs. In addition to making a down payment borrowers are also required to pay mortgage closing costs and potentially hold savings in reserve when the mortgage closes so borrowers need to make sure they have enough money to meet the lender's down payment and other qualification requirements.
The loan program you select also impacts how much mortgage you qualify for. For example, the initial monthly payments for an adjustable rate mortgage (ARM) or interest only loan are usually lower than for a fixed rate mortgage. The lower payment means that you can afford a higher mortgage amount, although ARMs and interest only loans involve more risk than a fixed rate loan because your payment can potentially increase significantly. Interest rates also vary by loan program and you can use our mortgage qualification calculator to see what size loan you qualify for with different programs.
There is more to mortgage qualification than just the payment you can afford based on your income and debt expenses. Lenders also consider cost items such as property taxes and hazard insurance to assess what size mortgage you can afford. Additionally, if you are buying a condominium or co-op that requires you to pay monthly dues then these fees are considered an additional monthly debt expense by the lender, which reduces the mortgage amount you qualify for. Borrowers should be sure to factor in all potential housing expenses -- including mortgage insurance -- to determine the loan amount they can afford.
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Kritt, Erica. “Mortgage Moves: How much can you afford?” CFPB. Consumer Financial Protection Bureau, March 21 2016. Web.