How to calculate how much house you can afford

What figures are required to use a home affordability calculator?

There are certain values you have to enter to determine your affordability. They are:  

1.      Your gross income: Your annual income without the taxes.

2.      The desired loan amount: The mortgage amount you need for the house.

3.      Loan Period: The loan period implies the time you need to repay the amount.

4.      Other monthly debts: This is the monthly debts you pay like credit cards and other loans.

5.      Credit scores: The credit score determines if you're eligible for the mortgage you desire.

6.      Housing expense-to-income ratio: This ratio is the sum of your housing expenses to your monthly income. The housing expense should be 28% of your monthly income. This includes the principal, interest and other insurance.

7.      Debt-to-income ratio: As the name suggests, this is the ratio of your monthly debts to monthly income. The debts should be 36% of your monthly income.

8.      Minimum down payment required: This is not an important factor as some of the calculators don't need any down payment at all. But if they need, you are supposed to pay around 3% of your house price.  

Advantages of home affordability calculator
There are certain advantages of home affordability calculator. They are:  

1.      You can easily calculate your mortgage amount you can afford.

2.      The financial and personal details remain safe and secure with the company.

3.      The calculators are user friendly and can be used free of cost.

4.      Since you are calculating online, it is quite fast and accurate.   By using the home affordability calculator, you can easily estimate your mortgage and the expenses on your house.     You can check here the average market rates:        

Average Market Rates
  30yrs FRM 15yrs FRM 5yrs ARM 1yr ARM
Avg. Rates 4.37 3.82 3.54 3.46
Points 0.7 0.7 0.6 0.7
Interest Rate Table by MortgageFit
- Contributed by MortgageFit community member