MORTGAGE AFFORDABILITY CALCULATOR
Quite affordable.
By registering you agree to our Terms of Service & Privacy Policy. Consent is not a condition of buying a property, goods, or services.
A Guide to Calculating How Much Mortgage You Can Afford
It's important to know how much home you can really afford before you start looking at properties. Use this guide and the calculator below to see how much mortgage you can realistically afford so that you can make an informed decision when purchasing your home. Figure out the maximum amount of monthly mortgage payments you can make before applying for a loan. Start by taking into account your current debt, including the interest rate and terms of your existing loans. This will help you determine what type of loan is within your budget and how much you can borrow to purchase a new home. Add in factors such as taxes, insurance, closing costs, estimated maintenance or repairs and any additional debts into the equation so that you have an accurate understanding of how much house you can really afford.
Step 1: Calculate your monthly income. This includes salary, wages, bonuses, commissions, and any other regular payments you receive.
Step 2: Calculate your total monthly debt payments. This should include payments such as car loans, credit cards, student loans and other outstanding debts.
Step 3: Subtract your total monthly debt payments from your total monthly income. This will give you an idea of how much money you can reasonably put towards a mortgage payment each month.
Step 4: Look at the interest rate on a loan and calculate what the total cost would be for that loan over the term of the loan. For example, if the loan term is 15 years and the interest rate is 5%, then you would pay $15,000 more than the loan amount over the course of those 15 years.
Step 5: Compare these costs for different loans using an online mortgage calculator or other online tools. Be sure to consider how much of a down payment you can realistically make, as this will affect the overall cost of the loan.
Step 6: Once you have determined your budget and estimated your costs, speak to a financial advisor or mortgage broker who can help you understand what loan options are available and which one fits best with your needs. They can also help you structure payments that work for your budget while still helping you meet your goals.
Step 7: Once you’ve decided on a loan, it’s time to make sure that all of the paperwork is in order. Make sure to read through the terms and conditions of the loan carefully and confirm any questions or uncertainties with your financial advisor before signing.
Step 8: After your loan is approved, it’s time to begin making your payments. It's important to make sure that you're paying on time, as missed payments can have a big impact on your credit score. Regularly review the loan agreement and track your progress to ensure you adhere to all of the terms of the contract.
Step 9: Finally, make sure you stay in contact with your financial advisor throughout the life of the loan. They can provide advice and support to help you manage any issues that come up during repayment. With their help, you can stay on top of payments and avoid any potential discrepancies.
Good luck! You’re now ready to take on the responsibility of a loan. With the right planning and guidance, you can repay your loan on time and improve your financial standing.
We hope this guide has been helpful in preparing you for taking out a loan. If you have any further questions about the process, please contact us at 813-602-1967
Affordability Common Phrases
Annual Income
This is the combined annual income for you and your co-borrower. Include all income before taxes, including base salary, commissions, bonuses, overtime, tips, rental income, investment income, alimony, child support, etc.
Down Payment
The typical rule of thumb is to pay 20 percent of the home's price as your down payment, although some mortgage loans require as little as 3.5 percent down. Your down payment reduces the total amount of your mortgage loan, so the more money you put down, the lower your payments will be - or the more expensive a house you can buy.
Other Monthly Debts
Include all monthly debt payments for of you and your co-borrower, including: minimum monthly required credit card payments, car payments, student loan payments, alimony/child support payments, any house payments (rent or mortgage) other than the new mortgage you are seeking, rental property maintenance, and other personal loans with periodic payments.
Do NOT include: credit card balances you pay off in full each month, existing house payments (rent or mortgage) that will become obsolete as a result of the new mortgage you're seeking, or the new mortgage you're seeking.
Loan Term
Your loan program can affect your interest rate and monthly payments. Choose from 30-year fixed, 15-year fixed, and more in the calculator.
Loan Type
There are several types of mortgage loans, but the most commonly used are fixed-rate and adjustable-rate loans. Fixed-rate loans have the same interest rate for the entire duration of the loan. That means your monthly payment will be the same, even for long-term loans, such as 30-year fixed-rate mortgages. Two benefits to this loan type are stability, and being able to calculate your total interest up front. Adjustable-rate mortgages (ARMs) have interest rates that can change over time. Typically they start out at a lower interest rate than a fixed-rate loan, and hold that rate for a set number of years, before changing interest rates from year to year. For example, if you have a 5/1 ARM, you will have the same interest rate for the first 5 years, and then your interest rate will change from year to year. The main benefit of an adjustable-rate loan is starting off with a lower interest rate.
Interest Rate
This field is pre-filled with the current average mortgage rate. Your actual rate will vary based on factors like credit score and down payment.
Property Tax
The mortgage payment calculator includes estimated property taxes based on the home's value. You can edit this in the advanced options.
Home Insurance
Home insurance or homeowners insurance is typically required by lenders, depending on the loan program. You can edit this number in the mortgage calculator advanced options.
HOA Fees
A homeowners association fee (HOA fee) is an amount of money that must be paid monthly by owners of certain types of residential properties, and HOAs collect these fees to assist with maintaining and improving properties in the association.
Debt-to-Income (DTI)
Your DTI is expressed as a percentage and is your total "minimum" monthly debt divided by your gross monthly income. The conventional limit for DTI is 36% of your monthly income, but this could be as high as 41% for FHA loans. A DTI of 20% or below is considered excellent.