How Much Home Mortgage Can I Afford?
Interested in buying a home? Our affordability calculator looks at over 15 factors across 50,000+ data points to help you answer the question “How much mortgage can I afford?” Enter your information below and we’ll help estimate your home affordability based on your income, down payment amount, and zip code.
Mortgage affordability calculator
How our mortgage affordability calculator works
We have done a lot of work to make our calculator as simple as possible to use, but that doesn’t mean it’s not powerful! We’ve collected data for over 50,000+ zip codes and consider more than 15 data points to give you as accurate an estimate of home loan affordability as we can. Below we describe in more detail how we determine your affordability. If you have any questions please don’t hesitate to contact us, we love hearing from our readers!
Mortgage interest rate
A small adjustment in interest rates can lead to a major change in your monthly payment, which is why mortgage interest rates are a major factor in determining your home loan affordability. You can learn more about mortgage interest rates here. We recommend you see what interest rate you qualify for with LendingTree and then use that rate with our calculator.
Similar to the way a mortgage underwriter would determine whether or not you can afford a loan, we estimate what the total new payment for your home would be and determine whether or not it is affordable for you. We take a look at the PITI payment – the total principal and interest payment for the mortgage, the monthly cost of taxes and insurance for the home, any homeowners association dues for the property, and any mortgage insurance that is required for the loan.
Once we’ve calculated your estimated monthly payment, we compare that amount to your monthly income to determine your debt-to-income ratio. Most conventional mortgages will allow borrowers to go up to a 50% debt-to-income ratio which will give you the maximum purchase price you can afford. However, a good rule of thumb is to target a debt-to-income ratio of 36% to ensure your new house payment will be manageable.
Estimating mortgage insurance
Mortgage insurance is required for any home purchase with less than a 20% down payment. Mortgage insurance can come in two forms – it can be paid up front in cash or included in the monthly payment. To find the maximum home purchase price you can afford we assume any mortgage insurance will be paid monthly. To estimate the cost of mortgage insurance for conventional loans we use the prices for borrower paid mortgage insurance from MGIC, one of the major private mortgage insurance providers in the industry.
To estimate the cost of mortgage insurance for FHA loans we include an upfront mortgage insurance premium of 175 basis points based on HUD’s guidelines. We remove this upfront amount from the estimated down payment before calculating the mortgage affordability. For annual insurance premiums, we use an estimate of 70 basis points. The HUD guidelines in Appendix 1 range of 45 to 105 basis points based on loan term and the loan to value ratio for the home.
Estimating property tax and homeowners insurance
To understand the home loan you can afford based on your monthly salary, we assume that property taxes and homeowners insurance will be paid monthly. To estimate the monthly cost of property taxes we use the average cost of property tax by state based on the work done by WalletHub. It’s important to note that this is only an estimate and the actual property taxes you will pay for your new home will likely be different. This estimate does not include local taxes or special assessments like Mello Roos taxes.
To estimate the cost of homeowners insurance we use the average cost of homeowners insurance by state based on the great work done by ValuePenguin. While the actual cost of homeowners insurance could change dramatically based on the specifics of the home you buy and it’s location, we provide this estimate as a guide and give you the ability to update it to get a more accurate estimation.
Our calculator does not currently take credit scores as a direct input. However, you can check your score and use that to check your interest rate with LendingTree. Providing an accurate estimate of interest rate will help us more accurately estimate your mortgage affordability.
Cash to close
To estimate the cost of mortgage insurance for FHA loans we include an upfront mortgage insurance premium of 175 basis points based on HUD’s guidelines. We remove this upfront amount from the estimated down payment before calculating the mortgage affordability.
Loan product and amortization term
To estimate your maximum mortgage affordability we assume you will choose a 30-year loan. We estimate your affordability for both FHA and conventional loans and present the maximum affordability of the two options.
We look up the county loan limits for FHA and conventional loans based on the zip code entered in the calculator and use that to determine mortgage affordability. Conventional loan limits are sourced directly from the FHFA database. FHA lending limits are sourced from the HUD database. In both cases we use the up-to-date lending limits for 2019 as of December 1, 2018.
Property type and occupancy
We assume that you are purchasing a single family home or condo. We use the one-unit lending limits for FHA and conventional loans and assume the home will be used as your primary residence.
Frequently asked questions
How much mortgage can I afford based on my salary?
Your income is one of the biggest factors when qualifying for a mortgage. When purchasing a home a mortgage underwriter will look at your capacity to repay the loan, and your income is the main focus there. Your mortgage lender will look at your income relative to your other debt payments and the estimated monthly costs of your new loan and then make a determination about whether or not that is affordable for you. Our mortgage affordability calculator uses many of the same techniques to estimate the monthly costs of buying a home and helps you understand how much mortgage you can afford based on your salary.
How much mortgage can I qualify for?
This amount will vary from lender to lender. Our mortgage affordability calculator can give you an estimate of what you can afford, but the best way to understand how much mortgage you can qualify for is to speak with a mortgage lender. We recommend comparing multiple lenders at LendingTree and getting pre-approved before making an offer to buy a home. You can learn more about the difference between getting pre-qualified and pre-approved here.
How much mortgage will I get approved for?
This amount will vary from lender to lender. Our mortgage affordability calculator can give you an estimate of what you can afford, but the best way to understand how much mortgage you can qualify for is to speak with a mortgage lender. Getting a pre-approval from a mortgage lender is much more involved than getting pre-qualified. In most cases you will submit all of your documentation and go through a full underwriting process with the mortgage lender. While this takes more time than getting a pre-qualification, it’s a much more rigorous process and will give you much more confidence in your ability to close the loan.
We recommend comparing multiple lenders at LendingTree and getting pre-approved before making an offer to buy a home. You can learn more about the difference between getting pre-qualified and pre-approved here.
What kind of house can I afford?
The type of home you choose can play a big role in how much mortgage you can afford. The location of the home matters as well. Our calculator assumes that you will purchase a one-unit single family home or condo that does not require any special insurance, such as flood insurance or earthquake insurance. We recommend reading our article about how lenders will underwrite your property to better understand how the home you choose can impact your mortgage affordability.
What mortgage payment can I afford?
When determining how much mortgage payment you can afford you need to look at the total payment, not just the payment for the loan. This includes principal and interest payments for the loan, homeowners association fees, the cost of property taxes, and any insurance you may need to cover the property.
Our mortgage affordability calculator estimates fees to calculate your estimated total mortgage payment. We then compare that payment plus the monthly cost of your other debts to your monthly income and use your debt-to-income ratio to determine your home affordability.