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Affordability Calculator

how much can you afford?

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Your debt-to-income (DTI) ratio is a financial measure lenders use to determine how much they will be willing to lend you for a mortgage.

The DTI is determined by dividing your monthly debt by your gross (before taxes) income. If you add your car payment of $375, student loan payment of $380, credit card payment of $210, and divided that by your monthly income of $5,000, your DTI before adding a mortgage payment would be 19.3%. A lower DTI implies a lower risk to the lender, and a DTI of 43% or higher is usually the cutoff to the highest amount a lender would be willing to approve you for.

0-36% : Affordable 37-42% : Stretching 43% or higher : Aggressive
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  • INCOME

    There are several types of measurable incomes, but the important one for figuring out how much of a mortgage you might qualify for is gross income, what you earn before taxes. Be sure to count the income of anyone you will co-borrow with.

  • DOWN PAYMENT

    The amount you can borrow is directly tied to your debts. Your debt-to-income ratio is what lenders will calculate before approving you for a loan.

  • INTEREST

    Interest rates affect how expensive of a home you can afford. Your interest rate depends on the type of mortgage you are getting and the current interest rates lenders are offering.

  • CREDIT SCORE

    Lenders look at several factors that indicate your ability to pay off the loan. Your credit score helps them determine how easily they can offer you better interest rates.

  • DEBTS

    Your down payment is the cash you put toward buying the home to complete a purchase. The higher your down payment, the lower your mortgage amount needs to be.

  • SAVINGS

    You want to be financially prepared when your home warrants sudden repairs. Thankfully, there are home warranties when you first move in, just in case there are unforeseen repairs needed.

financial FAQs

It can’t hurt to try. You can still get an FHA loan with a score between 500-600, as long as you put down a bigger down payment. Talking with a knowledgeable real estate agent or lender and having them advise you on your individual situation is often the best option.
A preapproval letter is a letter from your lender that shows how high of a loan they are willing to give you to buy a home. Sellers want to see this so they know you can actually pay for the amount you are offering. To get a preapproval letter, you will need to provide your lender with some basic financial information.
It depends on the type of loan you qualify for. With certain programs, like FHA loans, you can put as little as 3.5% down for a home. If you have served in the military, you may be eligible for getting into a home with zero down. Getting a conventional loan may require as much as 20% down, but this comes with the benefit of not having to pay private mortgage insurance.

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