Determine the Income Required for a Mortgage and Connect with Top Lenders
Use the FREEandCLEAR Required Income Calculator to determine the monthly gross income required to qualify for a given mortgage amount. When you submit your information we connect you with up to four leading lenders so that you can confirm your mortgage terms and compare multiple proposals to find the mortgage that is right for you. We also offer a version of this calculator that does not require personal information
Monthly Housing Payments
- Loan Type
How Much You Need to Earn to Qualify for a Mortgage
Gross Income Versus Net Income
Lenders use a borrower's monthly gross income before any deductions such as taxes, social security and medicare to determine what size mortgage you can afford. The amount of monthly gross income required to qualify for a mortgage depends on many factors including your monthly debt expense, credit score and your desired loan amount. Although lenders use gross income for the mortgage qualification process, borrowers should make sure they are comfortable paying their monthly mortgage payment and total monthly housing expense including property tax, homeowners insurance and other applicable housing-related costs based on their net income, or take-home pay. Borrowers should always remember that just because you qualify for a certain mortgage amount according to a lender does not mean that is the right mortgage amount for you.
Monthly Debt Expense
Your monthly debt expense for items such as credit card, auto and student loans plays a significant factor in determining how much money you need to earn to qualify for a mortgage. Lenders also consider child support and alimony payments to be debt expenses. Simply put, the higher your monthly debt expenses, the more gross income you need to qualify for a mortgage. The less your monthly debt expense, the less money you need to earn to qualify for a mortgage. In most cases borrowers improve their ability to qualify for a mortgage by reducing their monthly debt payments before they apply. For example, you could pay off part or all of your credit card debt or refinance a car loan at a lower interest rate to reduce your monthly payment. From a lender's perspective, the lower your monthly debt payments, the more money you have available to make your monthly mortgage payment. It is important to emphasize that lenders focus on your total monthly debt payments as opposed to your debt balance to determine what size mortgage you can afford. For example, if you have a $15,000 car loan with a $500 monthly payment, the lender uses the $500 monthly loan payment to qualify you for a mortgage, although the figures are related to each other and both are important.
Borrower Debt-to-Income Ratio
Your monthly gross income and debt expense are important because lenders use your debt-to-income ratio to determine what size mortgage you qualify for. A debt-to-income ratio represents the maximum amount of monthly gross income that you can spend on total monthly housing expense (mortgage payment, property tax and insurance) plus monthly debt expenses such as credit card, auto and student loans. Lenders typically apply a maximum borrower debt-to-income ratio of 43% to 45% to determine what size mortgage you qualify for, although some lenders and mortgage programs permit debt-to-income ratios of 50% or higher. The higher the debt-to-income ratio used by the lender, the higher the mortgage amount you qualify for. Additionally, the less monthly debt expense you have, the more mortgage you can afford because you can spend more money on your monthly mortgage payment while maintaining the same debt-to-income ratio.
More FREEandCLEAR Mortgage Resources
We provide an in-depth explanation and example of what size mortgage you can afford based on your income, debt and other factors
Review our comprehensive overview of borrower mortgage qualification guidelines
Compare mortgage rates and fees for top lenders near you. Comparing proposals from multiple lenders is the best way to save money on your mortgage
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