Mortgage Affordability Calculator

In general, the cost of housing should be 25% – 30% of your gross (pre-tax) income.

Your monthly mortgage payment will vary based on how much money you put into the down payment, your interest rate, and other factors. As you consider buying a home, it can help to draw up a budget to get a complete picture of your personal financial situation:

• Income
• Debt: student loan, car payment, etc.
• Monthly bills: electricity, phone, childcare, etc.
• Regular spending: groceries, household items, etc.
• Emergency savings
• Long-term savings

When preparing to buy a house, learn about the costs associated with homeownership that aren’t included in this calculator.

• Cost of buying a home: Buyers should be prepared to cover closing costs of 2% – 5% of the loan amount and moving costs, like movers and utility installation.
• Changes to monthly payments: Mortgage payments can change over time — for example, if property taxes go up. Keep in mind how other monthly expense will change as well, like utility bills and lawn care.
• Expected maintenance: Be familiar with the expected lifespan of major components in your home — like the roof, windows, HVAC system, and appliances — and how much they cost.
• Unexpected expenses: Surprises can happen over the course of homeownership, from a burst pipe to a fire or a severe weather event.
• Cost to sell a home: Most home sales typically cost 6% of the home’s sales price in realtor commission and transaction fees.

By using the Simple View of our calculator, you can get a good estimate of the maximum home price you can afford. The Advanced View allows you to input additional information for a more precise estimate. Here's how to use the calculator:

• Enter your gross income. That’s your income before taxes and other deductions.
• Enter your debts. Those are the monthly amounts you pay for your car loan, credit cards, student loans, and other debts.
• Then, enter the percentage of the home price you plan to contribute for the down payment.
• Next, enter an estimated interest rate you expect to pay.

NOTE: These numbers can easily be adjusted by using the slide bar.

Once you enter this information, you’ll see the maximum home purchase price you can afford.

If you want to get a more precise estimate, use Advanced View. This allows you to include your homeowners insurance, property taxes, and any homeowners association or condo fees.

Congratulations on taking this first step toward homeownership! Once you find your dream home, use our mortgage calculator to estimate your monthly payments.

To calculate the home price you can afford, this calculator uses your:

• Gross income
  Your total monthly income before taxes and other deductions, such as health insurance.
• Down payment
  The amount of cash a borrower pays up front to buy a home; it goes toward the purchase price, and mortgage loans are typically used to finance the remaining amount.
• Interest rate
  The percentage of the principal amount that must be paid each year to borrow the money for a mortgage loan. It does not reflect fees or any other charges associated with the loan.
• Term
  The loan repayment period. Typically, the longer the term, the lower the monthly principal payment — but more interest will be paid over the life of the loan. A shorter term can result in a larger monthly principal payment but less interest paid over the loan’s lifetime.
• Homeowners insurance
  The amount of insurance you will need to pay to cover any damage to your home. Rates are determined by several factors, including home size, age, location, and the deductible amount you choose.
• Homeowners association (HOA) or condo fees
  If you buy a condo or a home that has an HOA, you will pay a fee for services that may include landscaping, exterior maintenance, water, sewer, etc. These fees are usually collected on a monthly basis.
• Property taxes
  These are yearly taxes determined by the local government. They are a percentage of your home’s value, based on location, and may also include school and hospital taxes.