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Required Income Mortgage Calculator
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Required Income Mortgage Calculator

Calculator developed by

Use our Required Income Mortgage Calculator to determine the monthly gross income required to qualify for a given mortgage amount.  In short, this helpful calculator shows you how much money you need to make to afford a specific size of mortgage.  This can be especially useful if you have a home in mind that you want to buy but you are not sure if you earn enough to qualify for the mortgage.
This calculator uses factors such as your monthly debt payments, interest rate and mortgage length to show you the monthly gross income, or your how much you make before any deductions, you need to earn to afford the home loan you want.  The more debt expense you have and the higher your mortgage rate, the more money you need to make to qualify.  Additionally, mortgages with longer terms, such as 30 years loans, require less income to qualify because the monthly payment is less.  
The calculator also factors in your down payment and if you are required to pay monthly HOA fees.  If you buy a property that requires you to pay HOA or co-op dues then you need to earn more monthly income to qualify for the mortgage.  Your down payment affects your property purchase price which in turn impacts your property tax and insurance.  Our Required Income Mortgage Calculator shows you estimated taxes and insurance so you understand how much money you need to make to afford total monthly housing expense and not just your mortgage payment.  
We recommend that you evaluate multiple scenarios using different interest rates, loan amounts and lengths to understand how each factor impacts the income required to qualify for the mortgage you want.  Your credit score is another important input as borrowers with higher scores pay lower mortgage rates which reduces how much money you need to earn to afford the loan.  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 December 13, 2018
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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. 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.

How Much Money You Need to Make to Qualify for a Mortgage

1

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.  Our Required Income Mortgage Calculator tells you how much gross income you need to earn to afford a loan because this is lenders assess applicants.

2

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.  Use our Required Income Mortgage Calculator to understand how changes in your monthly debt expense impact how much money you need to make to qualify for a mortgage.

3

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 50% 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.

4

Other Costs Factors to Consider

If the property you are buying requires you to pay a monthly homeowners association fee or co-op dues then then you need to make more money to qualify for a mortgage as compared to buying a single family home that may not require those extra costs.  HOA and cop-op fees are counted included in your monthly debt expense which can make it more challenging to afford the loan you need, especially if your application is right on the border.  It is important to understand how extra expenses affect your ability to qualify for the mortgage you want. 

5

Your Type of Employment and Job History Also Matter

In addition to evaluating how much money your make, lenders also consider what type of work you do and your employment history when you apply for a mortgage.  Self-employed applicants are usually required to have a two year track record, as verified by your tax returns, to use that income to qualify for a mortgage.  Lenders also looks at the consistency of your income and you may need to explain any seasonality or fluctuations in earnings.  The two year work history also usually applies to bonus  and commission income because lenders want to verify that your earnings are steady and expected to continue after your loan closes.  When determining how much money you need to make to qualify for a mortgage, borrowers should be sure to understand lender guidelines for income and employment history, especially if you are not a salaried or hourly worker that receives a W-2 from your employer.

More FREEandCLEAR Mortgage Resources

Mortgage Guides

What Size Mortgage Can I Afford?

We provide an in-depth explanation and example of what size mortgage you can afford based on your income, debt and other factors

Resources

Borrower Mortgage Qualification Requirements

Review our comprehensive overview of borrower mortgage qualification guidelines

Resources

Mortgage Rates

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

Ask a Mortgage Expert

Ask a Mortgage Expert

Got mortgage questions? We love answering them. Submit your mortgage questions and receive an informative response within 24 hours

Programs

Employment History Requirement for a Mortgage

Understand the employment history requirement for a mortgage depending on the type of work and loan program

Sources

Home Affordability: http://myhome.freddiemac.com/buy/what-you-can-afford.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

Harry Jensen LinkedInLinkedIn | Email Harry JensenEmail
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