Mortgage  Question?
Home You Can Afford with Low Payment and Small Down Payment

How do you determine what price home you can afford to buy with a low monthly mortgage payment and small down payment?

Michael Jensen
, Mortgage and Finance Guru
Edited by Harry Jensen

How much home you can afford depends on many factors including your down payment, monthly gross income and debt expenses, your mortgage rate, loan length and loan program. As we outline below, these factors impact the price of the home you can afford in different ways.

Down payment. The higher your down payment, the higher the price home you can afford. In addition to your down payment, you should be sure to take into account closing costs and potential reserves you may be required to hold at closing as these can be significant expenses.

Review Best Low Down Payment Mortgage Programs

Monthly gross income and debt. The higher your income and lower your monthly debt expense, the higher the mortgage you qualify for and the more house you can afford. Please note that lenders use your gross income -- which is your income before any deductions -- and your debt payments as opposed to your debt balance, to determine the mortgage you qualify for.

Mortgage rate. The lower your mortgage rate, the higher the loan amount you can afford and the more home you can buy. A lower interest rate reduces your monthly payment or enables you to qualify for a higher loan amount. In short, lower mortgage rates enable you to stretch your home buying dollars further.

Loan length. The longer your loan, the lower your monthly payment and higher the mortgage you qualify for. A shorter loan reduces your total interest expense but increases your monthly payment, which limits the mortgage you can afford. This is why most people select a thirty year mortgage when they buy a home.

Loan program. The type of loan you select -- fixed rate, adjustable rate or interest only -- impacts the mortgage you qualify for and how much home you can buy. Programs such as an adjustable rate mortgage (ARM) or interest only loan may increase the mortgage and what price home you can afford. Despite the potential benefits offered by other mortgage programs, most home buyers choose a fixed rate mortgage because of the greater certainty and peace of mind it provides.

As illustrated by the points above, there are many factors that influence what price home you can afford to buy. Because there are so many variables involved, the best way to determine how much home you can buy is to use the calculator below, which factors in all of these inputs.


This calculator incorporates your down payment, debt-to-income ratio, interest rate and loan length to show you what price home you can afford as well as your estimated monthly mortgage payment, property tax and homeowners insurance. You can use this information to determine what price home best meets your financial situation.

Perhaps the most important factor in determining how much home you can afford is to review all of the costs involved in owning a home -- the mortgage payment, property tax, homeowners insurance, maintenance and upkeep, HOA or co-op dues, etc. -- and to make sure you are comfortable with the required financial commitment. This enables you to buy a home that fits your personal budget, which should be your ultimate goal.

The table below shows mortgage rates and closing costs for leading lenders in your area. We recommend that you contact multiple lenders to confirm the mortgage you are eligible for and the home price you can afford.  Comparing lenders also enables you to find the best mortgage terms.

Current Mortgage Rates in Ashburn, Virginia as of May 25, 2024
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Rate data provided by Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes, insurance premiums or private mortgage insurance if applicable. Actual payments will be greater with taxes and insurance included. Read through our lender table disclaimer for more information on rates and product details.


"Understanding Your Finances."  My Home by Freddie Mac.   Freddie Mac, 2019.  Web.

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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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