Understand Your Mortgage
How Much Can I Afford?
Quickly estimate your mortgage payments and get a clearer picture of how much you can afford with our easy-to-use calculator.
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Common Questions About How Much You Can Afford Calculations
Understanding mortgage calculations can be complex. Here are some frequently asked questions to help you navigate the process.
How do I calculate how much house I can afford?
To calculate how much house you can afford, consider your income, monthly debts, and down payment. Use an affordability calculator, which factors in your debt-to-income (DTI) ratio, loan term, and interest rate to estimate your maximum budget for a home purchase.
What percentage of my income should go toward my mortgage?
A common rule is that your mortgage payment should not exceed 28% of your gross monthly income. However, you should also factor in other expenses like property taxes, insurance, and maintenance when determining how much you can afford.
How does my credit score impact my affordability calculation?
Your credit score affects the interest rate you’ll receive, which in turn impacts your monthly payment and how much you can afford. A higher credit score generally results in a lower interest rate, allowing you to qualify for a higher loan amount.
What is the debt-to-income (DTI) ratio, and how does it affect my home affordability?
The DTI ratio compares your monthly debt payments to your gross monthly income. Lenders use this ratio to assess how much you can afford to borrow. A lower DTI ratio improves your chances of being approved for a larger loan, increasing your home affordability.
Should I include property taxes and insurance when calculating how much I can afford?
Yes, property taxes and homeowner’s insurance should be included in your affordability calculation. These costs add to your monthly payment and can significantly impact how much home you can comfortably afford within your budget.