You’ll enter your information; you can choose to calculate by your income and other debt payments you make or what monthly payment you’re comfortable with. Based on your information, the calculator determines the maximum home value you may be able to afford.

The calculator lets you enter your desired terms. You can choose whether to calculate based on your income or enter your own payment amount.

Your results will show the maximum home value you may be able to afford with the monthly payments calculated or entered. You can change the down payment amount, term and estimated interest to see how they change what you may be able to afford.

You can also include or exclude taxes and insurance. If you include them, you can enter your annual property tax, homeowner’s insurance and HOA fees, if they apply to you.

The pie chart breaks down where your payment goes: principal and interest, insurance, private mortgage insurance (if your down payment is less than 20%) and property taxes.

Interest rate is based on a combination of market and personal factors – the current economy, your credit score and how you’ll use the property.

The 28/36 Rule recommends keeping housing costs below 28% of pre-tax income and total debt payments below 36% (when including housing costs and all other fixed minimum monthly debt payments). However, this is not a strict requirement, and many lenders may approve mortgage applicants with DTIs over 36%. 

If you already know what monthly payment you’re comfortable with, you can calculate by that amount as maximum payment. If you would like the calculator to suggest an affordable payment, you can calculate it by providing your income.

Your down payment is toward part of the purchase price. What you pay up front decreases the amount you’ll need to borrow, which is the amount you’ll pay interest on. The larger your down payment, the less interest you pay over the life of the loan. Knowledgeable professionals recommend paying 5-20% down; if you pay at least 20% down you eliminate the need for Private Mortgage Insurance (PMI).

Some common costs include:

• Closing costs – these typically are from 2%-6% of the loan amount 
• Moving expenses – trucks, movers, remaining rent payments if you’re renting 
• Home inspection fees