HOW MUCH HOME CAN I BUY?

Use our mortgage calculator to calculate a home payment. Some general assumptions include a 30-year mortgage at current rates, a 1% property tax and 0.4% for homeowners insurance. You will also need to consider private mortgage insurance, which you’ll owe if your down payment is less than 20% of the purchase price.

You should reduce the maximum target if you have other savings needs (such as retirement and college) or additional expenses (such as child care, private school tuition, health care, or alimony payments).

Home Affordability Checklist

Before you search for homes or find a real estate agent, it’s important to ensure you’re financially ready and can actually afford the house you want to buy. You should be able to say yes to all six questions.

• Am I debt-free with three to six months of expenses in an emergency fund?
• Can I make at least a 10% (preferably a 20%) down payment?
• Do I have enough cash to cover closing costs and moving expenses?
• Is the house payment 25% or less of my monthly take-home pay?
• Can I afford to take out a 15-year fixed-rate loan?
• Can I afford ongoing maintenance and utilities for this home?

Let’s dig a little deeper to see how three simple steps can help you answer the question you’re really dying to know: “How much house can I afford?” Better yet, use our home affordability calculator to estimate how much house you can really afford based on your monthly take-home pay.