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Follow these four easy steps to figure out how much home you can afford:
What the home affordability calculatorresults meanA home affordability calculator is a great starting point for determining the home price you might qualify for. A home affordability calculator tells you:
A home affordability calculator doesn’t tell you:
The bottom line: While the home affordability calculator gives you an idea of what you might qualify for, you’re better off getting a mortgage preapproval if you’re looking for a dollar amount based on your unique financial circumstances. MORTGAGE CALCULATOR TIP Our calculator is pre-set to a “conservative” 28% DTI ratio. You can slide the bar up to an “aggressive” 50% DTI ratio to see how much more home you can buy. However, be sure your budget can handle the extra debt — lenders don’t look at expenses like utilities, car insurance, phone bills, home maintenance or groceries when they qualify you for a home loan. Lenders may also require a higher credit score, or extra mortgage reserves to cover a few month’s worth of mortgage payments, if the high payment becomes unaffordable. 5 things that could change your home affordability calculator results
How much mortgage can I affordbased on my loan type?How much house can I afford with a conventional loan?Conventional loans are popular for borrowers with credit scores of at least 620 and DTI ratios of 45% or less. Some conventional loan programs allow down payments as low as 3%, but you can avoid mortgage insurance if you make at least a 20% down payment. Conventional lenders often assess mortgage insurance to cover their losses if you default, and it’s usually part of your monthly payment. How much house can I afford with an FHA loan?First-time homebuyers with bumps in their credit history often choose loans insured by the Federal Housing Administration (FHA) to purchase a home. Borrowers with credit scores as low as 580 may qualify with a 3.5% down payment, while a score between 500 and 579 will require at least a 10% down payment. One big FHA loan drawback: You have to pay mortgage insurance regardless of your down payment, which may hamper your ability to buy a more expensive home. How much house can I afford with a VA loan?Many military borrowers choose VA loans to avoid making a down payment or paying mortgage insurance. While the VA doesn’t set a minimum credit score, most VA-approved lenders require at least a 620 score. VA-approved lenders also use residual income to determine how much you can afford, although the guidelines generally recommend a 41% DTI ratio. The residual income calculation determines how much free cash you have after deducting your monthly debts from your after-tax income, and may allow you to buy a more expensive home than with other loan programs. How much house can I afford with a USDA loan?Low- to moderate-income homebuyers searching for houses in USDA-designated “rural” areas may qualify for no-down-payment financing. The minimum score is typically 640, and buyers pay an annual and upfront guarantee fee instead of mortgage insurance. Strict income limits may cap how much home you can buy with a USDA loan, even if you meet the standard 41% DTI ratio requirement. How much house can I afford based on annual salary?The general rule is that you can afford a mortgage that is 2x to 2.5x your gross income. Total monthly mortgage payments are typically made up of four components: principal, interest, taxes, and insurance (collectively known as PITI).
How much can I afford for a house if I make 200K a year?How much house can I afford if I make $200K per year? A mortgage on 200k salary, using the 2.5 rule, means you could afford $500,000 ($200,00 x 2.5). With a 4.5 percent interest rate and a 30-year term, your monthly payment would be $2533 and you'd pay $912,034 over the life of the mortgage due to interest.
How much can you afford for a house if you make 50000 a year?You can generally afford a home between $180,000 to $250,000 (perhaps nearly $300,000) on a $50K salary. But your specific home buying budget will depend on your credit score, debt-to-income ratio, and the size of your down payment.
How much house can I afford with a salary of 60000?The usual rule of thumb is that you can afford a mortgage two to 2.5 times your annual income. That's a $120,000 to $150,000 mortgage at $60,000. You also have to be able to afford the monthly mortgage payments, however.
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