| One of the most important factors to know
before you seriously start looking at homes to purchase is to
determine how much you can afford to pay for a
home. Since most people want a rough idea of
affordability even before they start the process, this
page will help you do that. Before you actually start looking at
homes you need to determine the actual amount you can or want to
spend to purchase a home. To do this you need to get pre-qualified
or pre-approved by a mortgage lender, know how much you can add to
that for a down payment, and if you want to spend that much for a
home. (See 'Financing'
section.) |
A
Back of the Envelope Calculation
| 1.Affordable monthly house
payment is about 28% of gross monthly family income. |
| 2.Affordable mortgage is
about 115 times house payment (for
interest rates around 8%). |
| 3.Affordable home price is
mortgage amount plus down payment. |
|
Calculate
with Internet Tools
Note
that these calculations are only estimates. The only
calculation that counts is the one provided by your
Mortgage Company. Most companies provide this
information free of charge. (See 'Financing'
section.)