Home Affordability Calculator

- May 22, 2025
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Calculate how much house you can afford based on your income, debt, down payment, and current mortgage rates.

Income & Expenses

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Down Payment & Closing Costs

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Loan Details

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Property Details

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Affordability Settings

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About Home Affordability

Home affordability is determined by several factors including your income, existing debt, credit score, down payment, and current interest rates. Lenders typically use two key ratios to determine how much you can borrow:

Key Financial Ratios
  • Housing Expense Ratio: Your monthly mortgage payment (including principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income.
  • Debt-to-Income Ratio (DTI): Your total monthly debt payments (including your mortgage and all other debts) should not exceed 36% of your gross monthly income.
Down Payment Considerations
  • 20% Down Payment: The traditional amount, which allows you to avoid Private Mortgage Insurance (PMI).
  • Less than 20% Down: You'll typically need to pay PMI, which protects the lender if you default on your loan.
  • Down Payment Assistance: Many first-time homebuyers qualify for down payment assistance programmes that can help reduce the upfront cash needed.
Other Homeownership Costs

Remember that your mortgage payment isn't the only cost of homeownership. Also budget for:

  • Home maintenance and repairs (typically 1-3% of home value annually)
  • Utilities (water, electricity, gas, internet, etc.)
  • Potential HOA or condo fees
  • Landscaping and lawn care
  • Furniture and appliances

Understanding the Home Affordability Calculator

The Home Affordability Calculator is a handy tool that helps you find out how much house you can afford. It takes into account your income, existing debts, and how much you can put down as a down payment. You can also consider current mortgage rates, making it easier to plan your budget for buying a home.

How Your Income Affects Affordability

Your income plays a big role in determining how much you can spend on a home. The calculator asks for your annual household income, which helps estimate your monthly budget. It’s crucial to enter your gross income since this will give a clearer picture of your Financial status and home buying potential.

The Role of Monthly Debts

Monthly debt payments, like credit cards or car loans, also influence your home affordability. The calculator allows you to input these amounts, so it can calculate your maximum monthly housing payment. Here are some common debt types to consider:

  • Car loans
  • Credit card payments
  • Student loans
  • Personal loans

Calculating Your Down Payment

Another important aspect is the down payment. The calculator lets you specify how much you plan to put down and the percentage of the home's price that represents. A larger down payment can lower your monthly mortgage payments and might help you avoid private mortgage insurance (PMI).

Loan Details Matter

You’ll also need to consider the details of your loan, such as the loan term and interest rate. The calculator provides options for different loan terms, like 30 years or 15 years. Selecting the right loan term is vital because it affects your monthly payments and overall loan cost.

Property Costs Included in Your Budget

Buying a home involves more than just the housing payment. The calculator helps you factor in property taxes, home insurance, and even HOA fees. Knowing these extra costs can help you plan better. Here are some examples:

  • Property taxes
  • Annual home insurance premiums
  • Monthly HOA fees, if applicable

Advanced Affordability Settings

The Home Affordability Calculator has advanced options for deeper insights. You can set your maximum debt-to-income ratio and housing expense ratio, which gives a clearer view of your finances. These settings allow you to tailor the calculations to your financial comfort level and long-term goals.

Understanding Your Results

Once you enter all your information, the calculator provides results showing how much house you can afford. It breaks down your maximum home price, loan amount, and monthly payments. This breakdown helps you understand the financial commitment and prepares you for your home buying journey.