This means your monthly payments should be no more than 31% of your pre-tax income, and your monthly debts should be less than 43% of your pre-tax income. With a FHA loan, your debt-to-income (DTI) limits are typically based on a 31/43 rule of affordability. How much house can I afford with an FHA loan? You can edit this number in the affordability calculator advanced options. Any HOA dues you pay each month can affect your affordability. Some communities, such as condominiums and townhomes, are governed by a homeowner's association (HOA) that maintains communal areas and enforces rules and regulations for a monthly fee. You can choose to include or exclude PMI in the advanced options of the affordability calculator. Our calculator bases the PMI on the home price and down payment amount. PMI protects the lender against losses that may occur when a borrower defaults on a mortgage loan. Many lenders commonly require private mortgage insurance if a borrower contributes less than a 20% down payment on a home purchase. You can edit the calculator's default amount in the advanced options. Consult your insurance carrier for the exact cost. Generally, homeowner's insurance costs roughly $35 per month for every $100,000 of the home's value. The cost may vary depending on your location, type of coverage, any discounts you qualify for and your insurance provider. Typically, HOI is required to get a home loan. Homeowner's insurance (HOI)Īlso known as homeowner's insurance is a type of property insurance that covers a private residence. To obtain a more accurate total payment amount, get pre-qualified by a lender. Our calculator assumes a property tax rate by default, but you can edit this amount in the calculator's advanced options. The tax rate you pay can vary by state, county and municipality. When owning a home, you pay annual property taxes based on the assessed value of the property or purchase price of the home, which can affect your affordability. You can edit your loan term (in months) in the affordability calculator's advanced options. The most common term for a mortgage is 30 years, or 360 months, but different terms are available depending on the type of home loan that works best for your situation. The length by which you agree to pay back the home loan. Your interest rate will vary based on factors like credit score and down payment. Our affordability calculator uses the current national average mortgage rate. The borrower makes payments (with interest) to the lender over a set period of time until the loan is paid in full. Typically, the interest rate is expressed as an annual percentage of the loan balance. The amount that a lender charges a borrower for taking out a loan. You can get an estimate of your debt-to-income ratio using our DTI Calculator. Our affordability calculator will suggest a DTI of 36% by default. Your DTI is one way lenders measure your ability to manage monthly payments and repay the money you plan to borrow. The total of your monthly debt payments divided by your gross monthly income, which is shown as a percentage. A 20% down payment is ideal to lower your monthly payment, avoid private mortgage insurance and increase your affordability. Most home loans require a down payment of at least 3%. The amount of money you spend upfront to purchase a home. For example, if you have a $250 monthly car payment and $50 minimum credit card payment, your monthly debt would be $300. You can adjust this amount in our affordability calculator as needed. These are recurring monthly expenses like car payments, minimum credit card payments or student loans. If you have a co-borrower who will contribute to the mortgage, combine the total of both incomes to get your annual income. You can usually find the amount on your W2 form. This is the total amount of money earned for the year before taxes and other deductions. Learn more about the line items in our calculator to determine your ideal housing budget. Our calculator also includes advanced filters to help you get a more accurate estimate of your house affordability, including specific amounts of property taxes, homeowner's insurance and HOA dues (if applicable). You can calculate affordability based on your annual income, monthly debts and down payment, or based on your estimated monthly payments and down payment amount. Zillow's affordability calculator allows you to customize your payment details, while also providing helpful suggestions in each field to get you started.
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