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With a FHA loan, yourdebt-to-income limitsare typically based on a 31/43 rule of affordability. This means your monthly payments should be no more than 31% of your pre-tax income, and your monthly debts should be less than 43% of your pre-tax income. However, these limits can be higher under certain circumstances.
In higher-priced areas, the number can go as high as $970,800. You’ll also need to factor in how mortgage insurance premiums — required on all FHA loans — will impact your payments. The Rocket Mortgage Learning Center is dedicated to bringing you articles on home buying, loan types, mortgage basics and refinancing. We also offer calculators to determine home affordability, home equity, monthly mortgage payments and the benefit of refinancing. No matter where you are in the home buying and financing process, Rocket Mortgage has the articles and resources you can rely on. In 2019, the average annual cost of homeowners insurance was $1,083 nationwide.
Current Mortgage Rates by State
Ultimately, how much home you can afford depends on your financial situation and preferences. It requires a more comprehensive decision than just how much money you want to spend on mortgage payments each month. Mortgage rates are determined by your lender and can be fixed or adjustable.
Just like lenders, our Affordability Calculator looks at your Debt-to-Income Ratio to determine what home price you can afford. Mortgage lender can lend you as much as you can “reasonably afford,” which could be more than you want to pay. Housing affordability calculator, and then factor in a set of facts about your life. Results of the mortgage affordability estimate/prequalification are guidelines; the estimate is not an application for credit and results do not guarantee loan approval or denial. Look up important mortgage terms in our comprehensive dictionary, and use our calculators to help set your budget. Before you start looking at real estate and shopping around for the right lender, it’s important to take these steps to improve your chances of becoming a homeowner without breaking the bank.
How to determine how much house you can afford
There are quite a few opportunities to get financial assistance with buying a home. If it’s your first time — or if you haven’t owned a home in the last three years — start by exploring the first-time homebuyer loans and programs that cater to your state or city. There are also grant programs, many of which are tailored to help low- and moderate-income borrowers with money that does not have to be paid back. Additionally, you might be able to get assistance based on your line of work. With home prices hitting record highs, you might wonder whether now is even a good time to buy a house. It’s important to focus on your personal situation instead of thinking about the overall real estate market.

Here's a look at home loan options that allow for down payments of 3.5% or less. Debt payments are payments you make to pay back the money you borrowed. For a mortgage loan, the borrower often is also referred to as the mortgagor .
Home affordability FAQs
With a FHA loan, your debt-to-income limits are typically based on a 31/43 rule of affordability. This calculator helps you estimate how much home you can afford. Simply enter your monthly income, expenses and expected interest rate to get your estimate. Adjust the loan terms to see your estimated home price, loan amount, down payment and monthly payment change as well. Once you find the price you can afford, contact a Home Lending Advisor or go to your local branch to get started. For example, let’s say that you could technically afford to spend $4,000 each month on a mortgage payment.

If you have a co-borrower who will contribute to the mortgage, combine the total of both incomes to get your annual income. Money that you can spend on the down payment and closing costs. Make a mortgage payment, get info on your escrow, submit an insurance claim, request a payoff quote or sign in to your account.
One rule of thumb says you can afford a home that’s three to five times your household income—depending on your debt. So if you have $100,000 in income and no debt, feel free to consider that $500,000 midcentury modern ranch you’ve had your eye on. But let’s say 20 percent of your income goes to paying down debt—then you’ll want to look at homes closer to the $300,000 range. Your house budget is based on how much you can afford to pay each month and how much you have to put down. While a 20 percent down payment is ideal, the majority of first-time homebuyers actually put down between 5 and 10 percent. Our affordable lending options, including FHA loans and VA loans, help make homeownership possible.
It is not Zillow's intention to solicit or interfere with any established agency relationship you may have with a real estate professional. In addition to the table covering the 35 largest metros in the U.S., you can see more detailed reports for locations in every state. Open the report for the city nearest you – you may find your exact town covered within the report. At the very least, you’ll get an idea of what’s happening nearby, which is usually a pretty good indication of what’s happening in your market.
Low- to moderate-income homebuyers searching for houses in USDA-designated “rural” areas may qualify for no-down-payment financing. The minimum score is typically 640, and buyers pay an annual and upfront guarantee fee instead of mortgage insurance. Strict income limits may cap how much home you can buy with a USDA loan, even if you meet the standard 41% DTI ratio requirement.

Your gross income is the amount you earn each year before taxes or deductions. The mortgage affordability calculator will divide that number by 12 to come up with your gross monthly qualifying income. Deciding whether or not PMI is right for you depends on a few different factors. Although PMI raises your monthly payment, it may allow you to purchase a home sooner, which means you can begin earning equity. It’s important to speak to your lender about the terms of your PMI before making a final decision. PMI typically costs between .05% to 1% of the entire loan amount.