When you’re buying a home, mortgage lenders don’t look just at your income, assets, and the down payment you have. They look at all of your liabilities and obligations as well, including auto loans, credit card debt, child support, potential property taxes and insurance, and your overall credit rating. Use this calculator to determine how much of a mortgage you may be able to obtain.
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Monthly Debt and Obligations Should Include:
To arrive at an “affordable” home price, we followed the guidelines of most lenders. We’ve allowed a total debt-to-income ratio of no more than 36 percent. And we have assumed a housing payment-to-income ratio of 28% for our conservative estimate, and 33 percent for the aggressive one. Before buying, however, you should also factor in other savings needs, including retirement and college.
ASSUMPTIONS: We’ve assumed a 30-year mortgage term, annual property tax of $3,500 and homeowners insurance of $481 — the national average. And we do not factor in private mortgage insurance, which you’ll owe if your downpayment is less than 20 percent of the purchase price. It averages from $50 to $80 per month. Plug in your own numbers for more tailor-made results.