Home
Mortgage Calculator

How Much House Can I Afford?

Payment Calculator

This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate.

Understanding Your Home Buying Budget

Buying a home is one of the biggest financial decisions you'll ever make. Before starting your search, it's essential to determine how much house you can afford. This ensures you find a property that fits your lifestyle while staying within your financial comfort zone.

Key Factors That Determine Home Affordability

1. Income & Debt-to-Income Ratio (DTI)

Lenders use your income and debt-to-income ratio (DTI) to determine how much you can afford. Ideally, your total monthly debts, including mortgage, should not exceed 36% of your gross income. A lower DTI improves your chances of securing better loan terms.

2. Credit Score & Interest Rates

Your credit score plays a significant role in mortgage approval and interest rates. A higher score qualifies you for lower rates, reducing monthly payments and increasing purchasing power.

3. Down Payment & Loan Type

A larger down payment lowers monthly mortgage costs and eliminates the need for private mortgage insurance (PMI). Different loan programs, such as FHA, VA, and conventional loans, have varying down payment requirements.

4. Property Taxes & Homeowners Insurance

Beyond the mortgage, property taxes and insurance contribute to your monthly expenses. Tax rates vary by location, so researching local tax policies helps estimate total costs.

5. Additional Homeownership Costs

Owning a home involves more than just mortgage payments. Consider maintenance costs, HOA fees (if applicable), utilities, and potential renovations when determining affordability.

How to Calculate Your Home Budget

A simple way to estimate your home budget is using the 28/36 Rule:

  • Spend no more than 28% of your gross monthly income on housing expenses.

  • Keep total monthly debts (including housing, car loans, and credit cards) under 36% of your income.

For example, if you earn $6,000 per month:

  • 28% for housing = $1,680 maximum mortgage payment

  • 36% for total debt = $2,160 total debt payments

Online mortgage calculators can also help refine your estimates by factoring in loan terms, interest rates, and property taxes.

Steps to Get Pre-Approved for a Mortgage

Getting pre-approved gives you a clear budget before house hunting. Follow these steps:

  1. Check Your Credit Report – Review and improve your credit score if needed.

  2. Calculate Your Budget – Use affordability guidelines to determine a comfortable range.

  3. Gather Financial Documents – Prepare pay stubs, tax returns, and bank statements.

  4. Compare Lenders & Loan Options – Shop around for the best mortgage rates and terms.

  5. Get Pre-Approved – Obtain a lender’s pre-approval letter to strengthen your buying position.

Start Your Home Search Today!

Knowing how much house you can afford puts you in control of your home-buying journey. At VIP Realty, we specialize in helping buyers navigate the market and find the perfect home within their budget.