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# Home Afordability Calculator

Gross Income
/year
Down Payment
Closing Cost
Term
Years
Rate
%
Insurance
Property Tax
HOA Fee
/year
Debt Payment
/month
DTI Ratio
##### Related
Mortgage Calculator Closing Cost Calculator Down Payment Calculator
Calculated Results
You Can Borrow156,566.99
House Price 163,944.49
Down Payment 7,377.50
Closing Cost4,918.33
Total Closing Payment12,295.84
Monthly Mort.840.49
Monthly Tax195.71
Monthly Insurance65.24
Monthly HOA0.00
Monthly PMI65.24
Front DTI28
Back DTI28
Total Monthly Payment1,166.67
##### How Much House Can I Afford?

There are two ways that we can help you figure out the house price that you can afford. The first way is if you provide the monthly budget that you can afford for owning a house that includes mortgage, property tax, insurance, and other cost such as HOA fee.

For example, if you can save $2000 every month currently and plan to use that money to buy a house instead. You can input the monthly budget of$2000. If your bank saving account balance is \$40,000 and you want to use it for the down payment. So you can input the down payment amount of 40,000. If you don't know the exact value of the closing cost, you can leave the average estimation of 3%. Then input your mortgage information, such as 30 years with interest rate of 5%. Find out what percentage of property tax to the house market value in your area, and input that value. The calculator will find out the home price and total mortgage loan amount. If the down payment is less than 20% of the home price, 1% of PMI monthly payment will added into your total monthly payment by the calculator.

The second way to find what you can afford for a house is to input your gross income. Then select your DTI ratio. Generally you should leave the DTI with the default selection unless you have a FHA or VA loan. Then we will calculate the home price you can afford. We also calculate the front and back DTI.

##### What Is The DTI and Front-End Debt-to-Income Ratio (DTI)?

The front-end debt-to-income ratio (DTI) is a variation of the debt-to-income ratio (DTI) that calculates how much of the gross income is going toward housing costs. If a homeowner has a mortgage, the front-end DTI ratio is usually calculated as housing expenses (such as mortgage payments, mortgage insurance, etc.) divided by gross income. In contrast, a back-end DTI calculates the percentage of gross income going toward other types of debt like credit cards or car loans. To qualify for a mortgage, the borrower often has to have a front-end debt-to-income ratio of less than an indicated level. Having stable income and a good credit score won't necessarily qualify you for mortgage loan. In the mortgage lending world, your risk of financial ruin is measured by your debt-to-income ratio, which, simply put, is a comparison of your housing expenses and your monthly debt obligations versus how much you earn. Higher ratios tend to increase the likelihood of default on the mortgage.

For example, in 2009 many homeowners had front-end DTIs that were significantly higher than average, and consequently, mortgage defaults began to rise. In 2009 the government introduced loan modification programs in an attempt to get front-end DTIs below 31 percent.

Lenders usually prefer a front-end DTI of no more than 28 percent. In reality, depending on credit score, savings and down payment, lenders may accept higher ratios, although it depends on the type of mortgage loan. However, back-end debt-to-income ratio is actually considered more important by many financial professionals for mortgage loan applications. In preparation for applying for a mortgage, the most obvious of strategies for lowering front-end debt-to-income ratio is to pay off debt. However, most people do not have the money to do so when they are in the process of getting a mortgage because most of their savings is going toward the down payment and closing costs. If you think you can afford the mortgage you plan to get, but your DTI is over the limit, a co-signer might help.