How Much House Can You Afford?
Buying a home is one of the biggest financial decisions you’ll make. Our Mortgage Affordability Calculator helps you estimate how much house you could afford based on your income, debts, and other factors. Get a clear picture of your homebuying budget before you start searching for your dream home.
Ready to take the next step? Our loan officers can walk you through your results, explain your options, and help you move forward with confidence. Let’s turn your numbers into a plan for homeownership.
A mortgage affordability calculator is a tool that helps you determine how much you can borrow for a home loan. By entering key financial details like income, debts, and down payment, you can estimate your ideal home price and monthly mortgage payment.
Why It’s Important
Understanding affordability helps you:
Set realistic expectations: Know exactly what you can afford so you can target your home search more effectively and focus on the properties that truly fit your budget.
Plan ahead: Get a clear picture of your price range so you can start budgeting for your down payment, monthly payments, and other homeownership costs with confidence.
Compare loan options: Explore how different down payments, interest rates, and loan terms impact your monthly payment — helping you choose the option that aligns best with your financial goals.
Make informed decisions: Use the calculator to approach conversations with your lender feeling prepared, knowledgeable, and ready to take the next step toward homeownership.
Enter Your Income: Enter your gross (pre-tax) yearly income. If you’re buying with a partner or co-borrower, include their income too for a more complete estimate.
List Your Monthly Debts: Add up any regular debt payments you make each month — things like credit cards, car loans, or student loans. Be sure to include your co-borrower’s debts as well. This helps the calculator factor in how much of your income is already committed.
Estimate annual property taxes: Property taxes can vary by location and are usually based on your home’s value. If you’re not sure, search for your area’s property tax rate, or as a Movement loan officer.
Estimate annual home insurance: Include the yearly cost of homeowners insurance. If you’re unsure, search for the average rate in your area for homes in the price range you think you will be searching for. This will be rolled into your estimated monthly payment.
Choose a Down Payment Amount: Enter how much you plan to put down upfront. A higher down payment can reduce your monthly mortgage and may help you avoid mortgage insurance. Remember, you often do not need to put 20% down to buy a home.
Select an Interest Rate & Loan Term: Input a current mortgage interest rate or use an estimate based on today’s average rates. This will help calculate your monthly payment and total affordability.
Select a Loan Term: Choose how long you want to repay your loan (typically 15 or 30 years). A longer term spreads out your payments, while a shorter term helps you pay off your home faster.
Once you’ve filled out the form, the calculator will show you an estimated home price and monthly payment. Feel free to adjust the numbers and explore different combinations to see what fits best with your financial goals.
1. Income (Monthly and Annual)
- Your income is a major factor in determining how much house you can afford.
- Lenders consider both monthly and annual earnings to assess mortgage eligibility.
- A higher income can improve your borrowing capacity, but consistent income stability is also key.
- If you have variable income (e.g., self-employment or commission-based jobs), lenders may average your income over a period to determine affordability.
2. Debt-to-Income Ratio (DTI)
- Lenders assess your debt-to-income (DTI) ratio, which compares your monthly debt payments to your income.
- The lower your DTI, the better your chances of qualifying for a loan.
3. Down Payment
- A larger down payment reduces your loan amount and lowers your monthly payment.
- If you put down less than 20%, you may be required to pay private mortgage insurance (PMI), which adds to your monthly costs.
- Some loan programs, such as FHA, VA, and USDA loans, allow for lower down payments or even 0% down options, depending on eligibility.
4. Interest Rates & Loan Terms
- Lower interest rates reduce your monthly payment and overall loan costs.
- A 15-year mortgage usually has higher monthly payments but saves you money in interest over time.
- A 30-year mortgage offers lower monthly payments but results in more interest paid over the life of the loan.
- Adjustable-rate mortgages (ARMs) may start with lower rates but can change over time, impacting affordability.
5. Credit Score
- Your credit score affects your interest rate, loan eligibility, and mortgage terms.
- Higher scores typically lead to better loan terms and lower interest rates.
- If your credit score is lower, you may still qualify for a mortgage, but with higher interest rates.
- Home Maintenance & Repairs: Owning a home means you’re responsible for ongoing upkeep and unexpected repairs–whether it’s replacing a water heater, fixing a roof leak, or general wear and tear. Setting aside funds for maintenance helps ensure these surprise expenses don’t strain your monthly budget.
- HOA Fees: If the property is part of a homeowners association (HOA), you may be required to pay monthly or annual dues. These fees can cover services like landscaping, exterior maintenance, or amenities such as a pool or gym, and should be factored into your overall housing costs.
- Closing Costs: These are one-time expenses due at the time of purchase. Closing costs can include lender fees, title insurance, appraisals, inspections, and other administrative expenses. It’s important to budget for these upfront costs in addition to your down payment.
While affordability calculators provide a strong estimate, they have limitations:
- They don’t factor in lifestyle expenses: Your day-to-day spending, savings goals, and other personal expenses aren’t included, so it’s important to think about your full financial picture when deciding what you can truly afford.
- Property taxes, insurance, and HOA fees vary: Property-related costs differ by location and home type. You can use averages to get an idea, but your actual costs could be higher or lower depending on where and what you buy.
- Interest rates fluctuate: Mortgage rates fluctuate based on market conditions, which can impact how much you qualify to borrow, and what your monthly payments will look like.
- Ignoring Additional Costs: It’s easy to focus solely on the mortgage payment, but other expenses like property taxes, homeowners insurance, HOA fees, and future maintenance should be included when determining what you can comfortably afford. These recurring and variable costs can significantly impact your monthly budget.
- Underestimating Debt-to-Income Ratio: Make sure to include all of your monthly debt payments — not just the obvious ones. Student loans, car payments, personal loans, and credit card balances all affect your financial picture and can influence how much mortgage you can realistically take on.
- Not Considering Future Expenses: A calculator looks at your current situation, but life doesn’t stand still. Consider potential changes like growing your family, changing jobs, or returning to school. These future expenses could reduce your available income and affect your long-term ability to manage a mortgage.
Understanding what you can afford starts with a good estimate and gets more precise as you move through the homebuying process. Here’s how these two steps work together:
- Start with an affordability calculator: This is a great first step to get a rough idea of your homebuying budget. By entering basic financial details like your income, debts, and estimated costs, you can explore different price points and plan accordingly.
- Get pre-approved when you’re ready to buy: Pre-approval is a more detailed and official process. A lender will review your credit, income, and financial documents to determine how much you can borrow. This gives you a specific loan amount and shows sellers you’re a serious buyer.
Our loan officers can help analyze your financial situation, explain loan options, and guide you toward the best mortgage for your needs. We make home financing simple and stress-free.
Understanding your mortgage affordability is key to making a smart and successful home purchase. By using our Mortgage Affordability Calculator, you can set realistic expectations, plan your budget wisely, and make informed decisions about your home financing options. Whether you're a first-time homebuyer or looking to upgrade, knowing how much house you can afford will help you navigate the homebuying process.
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A Movement loan officer can help break down your results and guide you through your best options.