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Mortgage  Question?
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What price home afford low payment and small down payment?

I want to spend $1,500 on my mortgage payment plus taxes and insurance and have $10,000 saved for a down payment and fees. How much home can I afford?

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

The best way to determine what size mortgage you can afford is to use the Mortgage Qualification Calculator on FREEandCLEAR. The calculator uses your gross income and debt to calculate how much mortgage you can afford based on different interest rates and mortgage lengths. The calculator also shows you your monthly mortgage payment and total monthly housing expense including property taxes and homeowners insurance.

Your target total monthly housing expense of $1,500 implies a mortgage amount of approximately $255,000, based on a 30 year fixed rate mortgage. There are many factors that go into determining what size mortgage you can afford including current interest rates, your credit score and if you are required to pay private mortgage insurance (PMI), so this is an estimated figure. Using the $255,000 loan amount, if you make a 3.5% down payment ($10,000), you can afford an approximately $265,000 home. Keep in mind that you are also required to pay for closing costs, which can run thousands of dollars, and maintain savings in reserve after your mortgage closes so the $10,000 you have saved toward your down payment and fees may limit what price home you can afford. For example, if you are required to use $2,000 of your savings for closing costs this mean you could make a down payment of $8,000 which implies a property purchase price of approximately $230,000. You can use our Down Payment Calculator to determine the down payment and total up-front money required to buy a home based on various purchase prices.

We also encourage you to review our comprehensive summary of low / no down payment mortgage programs on FREEandCLEAR as well as a helpful comparison of these programs. These programs can help you stretch your down payment dollars and afford more home. For example, borrowers can combine a low down payment program, such as an FHA Mortgage, with a down payment assistance program to buy a home with minimal borrower financial contribution.

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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.

About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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