Ruth Adams
Coldwell Banker Realty 832.729.7900

Mortgage Calculator

Deciding on what to spend each month can be a major part of early decision-making when buying a home. 

Use the mortgage calculator link from Independence Title below to give you a general idea of what payments will run.  

 

Determining how much house you can afford is based upon your income and debt profile. Generally, lenders cap the maximum monthly housing allowance (including taxes and insurance) to lesser of Front End Ratio (28% usually) and Back End Ratio (36% usually). 

Prequalifying for a mortgage is simple, and is intended to give you a working idea of how much mortgage you can afford. Combine this amount with your down payment, and you'll answer your question of “how much house can I afford?” This is not the same as being for a loan, which involves placing an application and providing documentation to a lender.  

Remember -- this is just a guide. Your final amount will vary depending on a number of factors, especially interest rate, which will be based on your credit score. When you're ready, a lender can give you a more exacting figure.

 

How to calculate how much house you can afford

 

To produce estimates, both Annual Property Taxes and Insurance are expressed here as percentages. Generally speaking, and depending upon your location, they will generally range from about 0.5% to about 2.5% for Taxes, and 0.5% to 1% or so for Insurance.

Front End and Back End debt ratios are to determine how much of your monthly gross income can be used for your mortgage debt (front end) and how much can be used to satisfy all your regular obligations (back end). The 28% and 36% ratios are standard in the mortgage world, but lenders may have other combinations available, such as 33%/38%.