Financial Mentor

  • New Visitor? Start Here
  • Member Login
  • Home
  • Calculators
    • Retirement Calculators
      • Ultimate Retirement Calculator
      • Retirement Withdrawal Calculator
      • Simple Retirement Savings Calculator
      • Retirement Investment Calculator
      • Millionaire Calculator
      • 401k Calculator… Simplified
      • 401(k) Early Withdrawal Calculator
      • Taxable vs Tax Deferred Calculator
      • Interest Calculator
      • Roth IRA Calculator
      • Present Value of Annuity Calculator
      • Easy Way To Save For Retirement Calculator
    • Mortgage Calculators
      • Mortgage Payoff Calculator – Extra Payments
      • Bi-Weekly Mortgage Calculator
      • Mortgage Balance Calculator
      • Mortgage Refinance Calculator
      • Interest Only Mortgage Calculator
      • Rent vs. Buy Calculator
      • How Much House Can I Afford Calculator
      • ARM Mortgage Calculator
      • Balloon Mortgage Calculator
      • Mortgage Payment Calculator – Amortization Schedule
      • Second Mortgage – Refinance & Consolidate
    • Auto Loan Calculators
      • Car Payment Calculator
      • Auto Payment Calculator
      • Car Finance Calculator
      • Lease vs. Buy Car Calculator
      • Car Lease Calculator
      • Car Cost Calculator
      • Car Rebate vs. Financing Comparison Calculator
      • Auto Loan vs. Home Equity Calculator
    • Savings Calculators
      • Future Value Calculator
      • Inflation Calculator
      • Interest Calculator – Simple Vs. Compound
      • Latte Factor Calculator
      • Spending Calculator – True Cost To Own
      • Money Saving Calculator
      • Millionaire Calculator
      • Present Value of Annuity Calculator
      • Compound Interest Calculator – Monthly
      • Compound Interest Calculator (Daily To Yearly)
      • Savings Goal Calculator – How Much To Save
      • Savings Account Calculator – How Long To Save
    • Investment Calculators
      • Investment Property Calculator
      • Annuity Calculator
      • Interest Calculator
      • Compound Interest Calculator
      • Present Value Calculator – NPV
      • Future Value Calculator
      • Taxable vs Tax Deferred Investment Calculator
      • Capital Gains Tax Calculator & Real Estate 1031 Exchange
    • Loan Calculators
      • Amortization Schedule Calculator
      • Loan Repayment Calculator
      • Accelerated Loan Payoff Calculator
      • Loan Interest Calculator
      • Interest Only Loan Calculator
      • Loan Payment Calculator
      • Personal Loan Calculator
      • Interest Rate Calculator – Solves For Missing Loan Term
    • Personal Finance Calculators
      • Net Worth Calculator – Personal Balance Sheet
      • Budget Calculator
      • Expense Calculator
      • Irregular Payments Budget Calculator
      • Cash Flow Calculator
      • Present Value Calculator – NPV
      • Latte Factor Calculator
      • Life Insurance Need Calculator
      • Wage Calculator – Convert Salary To Hourly Pay
      • Compound Interest Calculator (Daily To Yearly)
    • Credit Card & Debt Payoff Calculators
      • Credit Card Comparison Calculator
      • Credit Card Minimum Payment Calculator
      • Debt Snowball Calculator
      • Credit Card Interest Calculator
      • Credit Card Payoff Calculator
      • Credit Card Payment Calculator
      • Debt Payoff Calculator
      • Debt Consolidation Calculator
      • Debt Reduction Calculator (With Amortization Schedule)
      • Debt Repayment Calculator
      • Debt Calculator
  • Resources
    • Freebies
      • 52 Weeks to Financial Freedom Course
      • Free 5-Video Mini Course - Financial Planning Mistakes
      • Free Books
      • Free Audio
      • Subscribe to Our Newsletter
    • Recommended Books
      • Wealth Building
      • Beginner Investing
      • Advanced Investing
      • Personal Finance
      • Market History & Bubbles
      • Early Retirement
      • Copywriting/Marketing
      • Productivity
      • Business/Entrepreneur
      • Real Estate Investing
    • Learn more
      • New Visitors Start Here
      • How To Invest Your Money
      • Recommended Tools
      • Ask Todd
      • The Money Wheel
  • Topics
    • Investment Advice
      • Alternative Investment Strategy
      • Investment Risk Management
      • Due Diligence
      • Buy and Hold Myth
      • Annuity
      • Investment Fraud Prevention
    • Wealth Building
      • Wealth Systems & Programs
      • Financial Commitment
      • Leverage
    • Retirement Planning
      • Saving For Retirement
      • Early Retirement
      • How Much Money Do I Need To Retire?
    • Other Good Stuff
      • Life Insurance
      • Financial Advice
      • Financial Coaching
      • Personal Freedom
  • Products
    • Book Series
      • How Much Money Do I Need to Retire?
      • The Leverage Equation
      • The 4% Rule Revealed
      • Don’t Hire a Financial Coach!
      • Investment Fraud Prevention
      • Variable Annuity: Pros & Cons
    • Seven Steps to Seven Figures logo   Course Series
      • Step 1 – Foundation
      • Step 2 – Habitudes Of Successful Wealth Builders
      • Step 3 – Design Your Wealth Plan
      • Step 4 – Take Massive Action
      • Step 5 – Expectancy Investing
      • Step 6 – Alternative Investing
      • Step 7 – True Wealth – Personal Freedom
  • Coaching
    • Learn More About Money Coaching
      • Why Hire A Money Coach? The Benefits…
      • Learn How Financial Coaching Works…
      • Smart Consumer’s Guide To Money Coaching & Education
      • Financial Coaching – The Differences Worth Knowing
    • How To Start Financial Coaching – Pricing & Next Steps
      • Are You Ready to be Coached?
      • Schedule Your Strategy Session
      • Client Testimonials
  • Podcast
    • Get All Podcast Episodes And Subscribe Here
    • How To Build Wealth Through Business with Jaime Tardy
    • Early Financial Independence With Luke Landes
    • How To Choose A Financial Advisor with Michael Kitces
    • How to Get Rich Slowly with J.D. Roth
    • Why “Follow Your Passion” Is Bad Advice with Cal Newport
    • Money and Relationships with Farnoosh Torabi
    • How To Budget Your Way To Wealth with Jesse Mecham
    • Simple Financial Planning – The Only 6 Ideas You Need To Know With Philip Taylor
    • The Shocking Truth About The Financial Advice Business With Jeff Rose
    • Automatic Wealth – How To Master Your Habits with James Clear
    • How To Engineer Your Wealth Using Retirement Calculators With Darrow Kirkpatrick
    • The Wall Street Journal & Citi Guide To Money And Happiness With Jonathan Clements
    • How To Convert Your Volatile Investment Portfolio Into Automatic Income With Wade Pfau
    • Life Reimagined and The New Retirement with Richard Leider
  • More
    • About
      • Contact
      • Todd R. Tresidder – Founder
      • Why Financial Mentor Is Necessary
      • Mission Statement
    • Legal
      • Privacy Policy
      • Cookie Policy
      • DMCA Policy
      • Copyright & Reprint Policy
      • Testimonials Disclaimer
      • Terms & Conditions Of Use
    • Press Room
      • Media Mentions
      • Published Articles
      • Audio Interviews
      • Photos & Images

How Much House Can I Afford – Mortgage Affordability Calculator


Forget traditional mortgage qualification rules-of-thumb like 28% or 36% of...show more instructions

earned income. These rough guidelines don’t accurately answer the “how much house can I afford” question because too many other financial variables are ignored.

Instead, use this mortgage affordability calculator to convert what you currently pay in rent (or could afford to pay in rent) into the equivalent mortgage payment. By using actual cash outflows (rent) and current interest rates you get a more realistic perspective on how much mortgage you can afford.


Mortgage Affordability Calculator

Rent payment you can afford:
Expected mortgage interest rate:
Mortgage term (years):
Expected annual property taxes:
Expected annual insurance:

Downpayment % 0% 5% 10%
Mortgage you can afford:
Down payment amount:
Price of home:

How Much House Can You Afford?

Are you thinking about buying a house and getting a mortgage?

If so, you’re probably hearing advice from friends, family,  and co-workers about how much house you can afford.

The traditional rule of thumb is 26-38% of earned income depending on risk tolerance and other budget factors.

A more direct route to a more accurate answer is to use this Mortgage Affordability Calculator to show you the mortgage you can afford based on the rent payment you can afford to make.

In other words, instead of using rules-of-thumb percentages, the Mortgage Affordability Calculator converts rental costs into ownership costs thus keeping your housing budget constant.

Below are some additional tips to help you decide if you are truly ready to become a homeowner.

mortgage affordability calculator image

Signs That You Are Ready To Buy A House

The math of housing affordability is important, but consider the following questions affecting your home ownership decision before committing.

  • Can you afford the monthly payments? Carefully evaluate your financial position. Put together a realistic budget detailing all your expenses so you know how much house you can really afford. Fortunately, it is not that hard because if you already know how much you can pay in rent then the Mortgage Affordability Calculator will convert that amount into monthly mortgage payments thus providing an estimated purchase price net of insurance and property tax costs. It’s simple and easy.
  • Have you saved enough for the down payment? The down payment is the amount you pay up-front toward the purchase price that reduces the financed mortgage balance. Most lenders require you to make a down payment, which is usually up to 20% of the value of the house. It is a good idea to have more than the required down payment saved before buying your home to help cover closing costs, moving costs, and redecoration expenses after moving.
  • Is your income reliable? Buying a house is a serious financial commitment so make sure your income source is stable. Are both you and your spouse working? Does your budget require both incomes or can you get by on just one if necessary? Take these factors into consideration when determining how much house you can afford.
  • Do you have an emergency fund? Many experts recommend saving somewhere between three and nine months of expenses in an emergency fund before you buy a house.
  • Is your credit score ready? When you apply for a mortgage, lenders will look at your debt-to-income ratio and credit score to decide your credit worthiness. You don’t need to have perfect credit when applying for a mortgage, but a decent credit score can help you obtain a lower interest rate and monthly payment.

In addition, there are other important, non-financial considerations to work through as well:

  • Do you like the location?
  • How long will you live in the house?
  • Does the house have enough room to support a growing family?

Think through these issues as you’re working with the Mortgage Affordability Calculator to determine if the house you are considering is truly the right fit for your needs – both budget and personal.

How To Find An Acceptable Monthly Payment

If you’re not sure what to enter into the “rent payment you can afford” box, that’s okay. Use the Budget Calculator to determine a proper housing allowance based on your income.

Another alternative is to start and maintain a budget that takes into account all your expenses.

The key is don’t make yourself “house poor” by committing too much of your budget to mortgage, taxes, and insurance. You need to leave enough money in your budget to fund retirement, the kids college, and have a little fun once in a while.

Life can be very difficult when you are strapped with mortgage payments greater than you can comfortably afford.

Final Thoughts

Besides overspending, another common mistake new homeowners make is buying before being fully prepared for the added responsibilities.

As a homeowner, you’ll always face ongoing responsibilities and repairs, especially if you buy an older home. You will want to improve your home to match your needs, and you’ll also have taxes and insurance to pay – none of which you’ll be used to as a renter.

Before you decide to buy a house, it is important to weigh your options. The Mortgage Affordability Calculator will help you find a real-world mortgage that you can afford.

Mortgage Affordability Calculator Terms & Definitions

  • Mortgage – The charging of real property by a debtor to a creditor as security for a debt, on the condition that it shall be returned on payment of the debt within a certain period.
  • Rent – A tenant’s regular payment to a landlord for the use of property or land.
  • Mortgage Term – The agreed length of time the mortgage will be paid until it is paid in full.
  • Interest Rate – The rate at which interest is paid by a borrower for the use of money that they borrow from a lender.
  • Property Tax – A levy on property by government that the owner is required to pay.
  • Insurance – A practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.
  • Down Payment – An initial payment made when something is bought on credit.
  • Credit Score – A number assigned to a person that indicates to lenders their capacity to repay a loan.

Related Mortgage Calculators:

  • Mortgage Payment Calculator With Amortization Schedule: How much will my monthly mortgage payment be? Includes taxes, insurance, PMI, and printable amortization schedule for handy reference.
  • Mortgage Payoff Calculator: How much extra payment should I make each month to pay off my mortgage by a specific date (and how much interest will I save)?
  • Bi-Weekly Mortgage Calculator: How much interest will I save paying my mortgage biweekly instead of monthly? How much more can I save if add an extra payment?
  • Mortgage Balance Calculator: What is my mortgage balance given the number of payments I’ve already made (or still need to make)?
  • Mortgage Refinance Calculator: How long will it take to break-even on my refinancing costs and what will be my total interest savings?
  • Interest Only Mortgage Calculator: How much lower will my payment be on an interest only mortgage compared to a conventional principal and interest mortgage?
  • Second Mortgage Calculator – Consolidate Savings With Refinance: How much will I save consolidating my first and second mortgages into a new first mortgage?
  • Rent vs. Buy Calculator: Should I rent or buy? What’s the better deal?
  • ARM Mortgage Calculator: How does an adjustable rate mortgage (ARM) compare to a fixed rate mortgage over the life of the loan (as opposed to just the teaser payment)?
  • Balloon Mortgage Calculator: How much will I owe (balloon) at the end of the payment period?
  • 36shares
  • 1
  • 1
  • 0
  • 35
  • 0
























More from Financial Mentor

New Visitors Start Here
Financial Freedom Course
Todd’s Books
Free Ebook & Ecourse

Click Below To Learn How To...

Invest smart. Build wealth. Retire early. Live free.

Financial Mentor

Get Your FREE Wealth Building Tooklit:

  • FREE COURSE: 52 Weeks To Financial Freedom
  • FREE BOOK: 18 Essential Lessons From A Millionaire
  • Tools and Tips Not Found On This Site
Free instant access

Calculators

Retirement
Mortgage
Credit Card
Debt Payoff
Auto Loan
Savings
Investment
Loan
Personal Finance
Compound Interest Calculator
Debt Snowball Calculator

Learn More

About Financial Mentor
About Financial Coaching
Our Books
7 Steps To 7 Figures
Podcast
Todd R. Tresidder
Press Room
Contact

Resources

How To Invest Your Money
Recommended Reading
Recommended Tools
New Visitors Start Here
Ask Todd
The Money Wheel
Courses FREE
Books FREE
Audio FREE

Facebook Twitter Google Plus LinkedIn YouTube Pinterest iTunes

Home   Privacy Statement   Terms of Use   Contact Us

Copyright © 2000–2019 • Financial Mentor • All Rights Reserved Worldwide
Disclaimer: Each calculator on this web site is believed to be accurate. However no guarantee is made to accuracy and the publisher specifically disclaims any and all liability arising from the use of this or any other calculator on this web site. Use at your own risk and verify all results with an appropriate financial professional before taking action. The information contained on this web site is the opinion of the individual authors based on their personal observation, research, and years of experience. The publisher and its authors are not registered investment advisers, attorneys, CPA’s or other financial service professionals and do not render legal, tax, accounting, investment advice or other professional services. The information offered by this web site is general education only. Because each individual’s factual situation is different the reader should seek his or her own personal adviser. Neither the author nor the publisher assumes any liability or responsibility for any errors or omissions and shall have neither liability nor responsibility to any person or entity with respect to damage caused or alleged to be caused directly or indirectly by the information contained on this site. Use at your own risk. Additionally, this website may receive financial compensation from the companies mentioned through advertising, affiliate programs or otherwise. Rates and offers from advertisers shown on this website change frequently, sometimes without notice. While we strive to maintain timely and accurate information, offer details may be out of date. Visitors should thus verify the terms of any such offers prior to participating in them. The author and its publisher disclaim responsibility for updating information and disclaim responsibility for third-party content, products, and services including when accessed through hyperlinks and/or advertisements on this site.
×

Yes, Send My FREE Wealth Building Blueprint!

  • E-Course: “52 Weeks to Financial Freedom”
  • Audio: Get my top tips
  • E-Book: "18 Essential Lessons From A Self-Made Millionaire"

×

Yes, Send My FREE Wealth Building Blueprint!

  • E-Course: “52 Weeks to Financial Freedom”
  • Audio: Get my top tips
  • E-Book: "18 Essential Lessons From A Self-Made Millionaire"

×

Yes, email me a screenshot of my calculator results!

We’ll email you a screen print of the calculator you just completed, exactly as it appears on your screen. We don’t save any of your data: it’s just an image. You can unsubscribe whenever you want.

Calculator screenshot sample
Sample Screenshot
×


mortgage affordability calculator image
×

Enter Your Email And We’ll Send You A Convenient PDF Of This Article!


mortgage affordability calculator image
×

Tell us where to send your 2 video guide showing UNCOMMON strategies for ACCURATELY calculating how much you need to retire…


Free video tutorial
×

Get Your Free Risk Management Course!

You’ll learn how to make more by risking less. Start today!

×

Hey, I understand that buying this course is an important decision. That’s why I let you…

Test Drive The Course – FREE!
Get 5 Sample Lessons Immediately

  • No cost or obligation.
  • No hooks or gimmicks.
  • The goal is to let you experience the quality for yourself.
  • I just need your email address to send them to you.
  • You can unsubscribe anytime.
Yes! Send me 5 sample lessons
No cost or obligation. Quit any time.
The only way you lose is by not trying.