For example, a combined monthly mortgage payment of $1,200 divided by gross monthly income of $4,500 equals a housing ratio of 27%. Keep in mind: homebuyer assistance programs vary by state and may have certain qualifications. Then pretend you have monthly debt payments that total $800 and you want to buy a home with a $2,000 monthly payment. One of the major factors that determines how much house you can afford is your debt-to-income ratiothat . These loans have competitive mortgage rates, and they don't require PMI, even if you put less than 20 percent down. But, with most mortgages, lenders will want you to have a DTI of 43% or less. However, you must do the math and figure out what percentage of income will be saved for your mortgage while still living comfortably. Input the interest rate you expect to pay on your mortgage if you arent sure of this yet leave the default value as this is representative of the current market average, Select a loan term from the drop-down menu this is the number of years over which you will repay your mortgage, Add your monthly income and that of your co-borrower, Under Monthly Liabilities, add any regular repayments you make on a monthly basis, The final section is Monthly Housing Expenses select the relevant answers from the drop-down lists provided if you dont know the answers yet, leave the default values there, Whether the lender will approve you for financing at the sales price shown, What your final mortgage interest rate or closing costs will be, How much your payment might vary based on your actual credit score. Use our delightfully easy mortgage calculator. That's at the limit that some conventional lenders allow. You and your mortgage specialist may also need to factor in expenses or changes that you know are on the horizon. 2023 Bankrate, LLC. Based on how much you make and how much you can pay for a down payment, find out how much "house" you can afford. The exact amount you'll be able to afford will depend on your debts, credit score, location, down payment, and other variables. Use this tool to calculate the maximum monthly mortgage payment you'd qualify for and how much home you could afford. Without it, some pages won't work properly. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion directly. For example, the 28/36 rule may help you decide how much to spend on a home. They want to know how much discretionary income you have the amount left over after your fixed expenses are taken care of. Additionally, interest rates offered for VA loans often turn out to be lower than those offered for conventional loans. Affordability Guidelines. Theyre what we call an insurance aggregator, which means they compile all the best rates from around the online marketplace and present you with the best ones. If you dont know your total monthly debts, click No and the calculator will ask you to enter monthly bill amounts for: Personal loan, child support and other regular payments. Mortgage Rates. At 6 percent, the same loan would cost $4,058. Answer a few questions and get personalized rate quotes from NerdWallet's top lenders in minutes. In that case, NerdWallet recommends an annual pretax income of at least $110,820, although you may qualify with an annual income of $100,104.