No one wants to hear “no” from a mortgage company, or wind up with a mortgage payment they’ll struggle with each month. Mortgage companies consider income, assets, down payment, current debts (like auto loans and credit cards), property taxes, insurance and your credit rating. Our Home Affordability Calculator can help you understand how much you may be able to comfortably borrow without stretching beyond your financial comfort zone.
How Much House Can I Afford? Calculator Definitions
Income — Your household’s total annual income.
Other monthly obligations — All other bills you pay every month, including utilities, food, school tuition, etc.
Annual interest rate (APR) — The interest rate you expect or hope to get for your mortgage. Research current mortgage interest rates in your area to get a better estimate of what you might expect to pay.
Annual property taxes — How much you will pay in local and county property taxes. Often, home listings will include tax information that you can use for this calculation.
Front-end ratio — How much of your monthly income will go toward paying your mortgage? The front-end ratio compares your total monthly housing payment (including principal, interest, taxes and insurance) with your monthly pre-tax income.
Back-end ratio — How much of your monthly income do you need to pay all your monthly bills, including your mortgage, credit card bills, utilities, car loans, etc.? The back-end-ratio compares your total monthly expenses to your total monthly income.