by mrhaseeb

Mortgage Affordability Calculator

Determine how much home you can afford based on your income, down payment, and location. Our calculator factors in taxes, insurance, and other costs to give you an accurate estimate.

Financial Details

Enter your financial information to calculate your home affordability

Your total pre-tax annual income
Credit cards, car loans, student loans, etc.
Amount you plan to put down
Percentage of home price
Current mortgage interest rate
Duration of your mortgage
Affects your interest rate

Your Mortgage Affordability

Home Price You Can Afford
$325,000
Maximum Monthly Payment
$1,850
Recommended Down Payment
$65,000
Debt-to-Income Ratio
34%

Monthly Payment Breakdown

Affordability by Down Payment

Monthly Payment Details

Principal & Interest $1,450
Property Taxes $275
Home Insurance $125
PMI $0
HOA Fees $0
Total Monthly Payment $1,850

Understanding Mortgage Affordability

How Mortgage Affordability is Calculated

Mortgage affordability is determined by several factors including your income, existing debts, down payment, and current interest rates. Lenders typically use the 28/36 rule:

  • 28% Rule: Your monthly mortgage payment should not exceed 28% of your gross monthly income.
  • 36% Rule: Your total monthly debt payments (including mortgage) should not exceed 36% of your gross monthly income.

Our calculator uses these guidelines to determine how much house you can comfortably afford while accounting for property taxes, insurance, and other location-based factors.

Tips to Improve Your Home Affordability

  • Increase your down payment: A larger down payment reduces your loan amount and may eliminate PMI costs.
  • Improve your credit score: A higher credit score qualifies you for better interest rates, saving you thousands over the loan term.
  • Reduce existing debts: Paying down credit cards and loans lowers your debt-to-income ratio.
  • Consider different loan terms: A 15-year mortgage has higher payments but saves significantly on interest.
  • Explore first-time buyer programs: Many states and cities offer special programs with down payment assistance.

Frequently Asked Questions

What is PMI and when do I need it?
Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home's value. It protects the lender in case you default on the loan. PMI typically costs 0.5% to 1% of your loan amount annually.
How does location affect affordability?
Location significantly impacts property taxes and insurance costs. Urban areas typically have higher property taxes and insurance rates than rural areas. Some states also have higher average property tax rates.
What's the difference between pre-qualification and pre-approval?
Pre-qualification is a preliminary assessment of your borrowing ability based on self-reported information. Pre-approval is a more thorough process where a lender verifies your financial information and commits to lending you a specific amount.
Should I choose a fixed or adjustable-rate mortgage?
Fixed-rate mortgages offer stable payments for the entire loan term, while adjustable-rate mortgages (ARMs) start with lower rates that can increase over time. Fixed rates are generally better if you plan to stay in the home long-term.
How much should I save for closing costs?
Closing costs typically range from 2% to 5% of the home's purchase price. These include loan origination fees, appraisal fees, title insurance, and other expenses. Be sure to budget for these in addition to your down payment.