Mortgage Calculator: How Much Can I Borrow? – NerdWallet

How to calculate your mortgage qualification

What’s behind the numbers in our ‘How Much Can I Borrow?’ mortgage calculator

When buying a home, the doubt “ How much can I borrow ? ” should be the second question you ask. The most important consideration is, “ How much house can I afford ? ” That ’ second because, even with all the angst involved in applying for and being approved for a home loanword, lenders are much inclined to loan you more money than you expect. That ’ s a surprising — and important — reality.

arsenic much as you want to buy a home, lenders want to loan you money. And the bigger the loan, the happy they are. You ’ ll know why when you see the calculate of the interest you ’ ll pay over the life of the loanword. It ’ s a very big total. But if you know how a lot home you can afford, of class, you ’ ll want to learn how much you can borrow. The NerdWallet “ How much can I borrow ? ” calculator can give you a solid estimate. The calculator considers standard mortgage requital elements, such as principal and interest. then, we take things a few steps far, factoring in taxes, insurance — even homeowner association dues — to help determine a real-life monthly payment. We besides examine your income and debt, fair as a lender would, to determine the maximum dwelling loan amount you ’ re likely to qualify for. Getting ready to buy a home ? We ’ ll find you a highly rated lender in just a few minutes. enroll your ZIP code to get started on a personalized lender match. ZIP code

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What a ‘How Much Can I Borrow?’ calculator does

The NerdWallet “ How much can I borrow ? ” mortgage calculator utilizes an easy bit-by-bit process : To begin, input :

  • Your annual income ( before taxes )
  • The mortgage terminus you ’ ll be seeking
  • The matter to pace you ’ re likely to earn
  • Your monthly recurring debt

If you don ’ t know how much your recurring debt payments add astir to in a month, click the “ No. Help me ! ” button. We ’ ll walk you through typical debts, like cable car loans and student debt. At this point, we ’ ll estimate your place taxes and indemnity. You can besides adjust those numbers if you have specific estimates.

Enter monthly HOA dues ( if applicable ) if you know what they ’ ll be. If not, you can always come back to this late. now, your results will appear, including :

  • An estimate of the maximal mortgage sum that NerdWallet recommends
  • A ballpark of your monthly mortgage payment
  • The utmost measure a lender might qualify you for
  • And how much your monthly mortgage requital might be for that total

How to use a ‘How Much Can I Borrow?’ mortgage calculator

With this calculator, you can run some “ what-if ” scenarios. For example, you may consider :

  • How long will I live in this family ? That can greatly impact your decision on whether to choose a 30-year fix rate loan or a shorter term. The longer term will provide a more low-cost monthly requital, but you ’ ll pay a lot more concern over the long term. A 15-year fixed-rate mortgage will cost you means less matter to over the life of the lend, but your monthly payment will be well more .
  • Is an adjustable-rate mortgage a better option for me ? If you plan on being in this family for just a few years, a 5/1 ARM could be a dear choice. You ’ ll enjoy a lower initial interest rate that ’ s fixed for five years, but the pace changes annually after that .
  • Am I trying to buy excessively much house ? sure, lenders may be more than happy to put your name on a big loan, but how do you feel about it ? Are you comfortable with how it may impact your monthly budget, or are you feeling a bit stretched ? Consider how your modern dwelling costs may impact your other spending goals, such as travel and savings .
  • How much of a down requital should I make ? It ’ second constantly the large question. Are you putting down angstrom little as possible and having to make up for it with larger monthly payments — and possibly having to pay mortgage policy ?

Mortgage affordability 101

It’s not what you can borrow, it’s what you can afford

In some respects, the mortgage lend industry is working against your best interest. If you are deemed a dependent borrower, a lender is prone to approve you for the maximum it believes you can afford. But in some cases, that measure may be besides generous. Buying a home constantly means dealing with adult numbers. And the impact to your budget may seem to be a reach, peculiarly in the begin. The challenge is buying a home that meets your current and future needs, without feeling like all of your money is in your home — leaving you without the fiscal freedom to travel, save for other priorities and have a cash flow cushion. now that the NerdWallet ‘ How much can I borrow calculator ’ has given you an estimate of your buying ability, you may want to gut-check the issue by :

  • Run affordability scenarios. You can get another position of your home-buying budget by running some what-ifs through the NerdWallet home affordability calculator .
  • spill to more than one lender. You are more likely to get a better pastime rate by comparing terms offered by multiple lenders, and it might be illuminating to see the loanword amounts different lenders will qualify you for .
  • Consider all homeownership expenses. It ’ s not just what ’ south built into your monthly payment — such as indemnity, taxes and the pillow — but the early having-a-home expenses, like structural sustenance, new furniture, possibly even yard maintenance equipment .

What factors impact the amount you can borrow

Lenders consider several factors in determining the measure you qualify for, including :

  • Your debt-to-income ratio. Our ‘ How much can I borrow calculator ? ’ depends on an accurate input of your income and recurring debt. You ’ ll want to in truth hone those figures down to a fine degree, because lenders will be using them besides .
  • Your loan-to-value ratio. This ratio is a function of the amount of money you put down. If you want to drill down on this calculation, use NerdWallet ’ s loan-to-value calculator .
  • Your credit score. This number impacts the price of your loanword, more than how much you ’ ll qualify for. But that ’ s very significant. If you don ’ metric ton know your score, get it here .

How can I qualify to borrow more?

If you ’ ra disappointed by the ‘ how much can I borrow ’ results, remember that there are many factors at exploit. little improvements in one or more can make a hearty difference :

  1. A bigger down payment always helps. The more money you put down, the better you ’ ll front in the eyes of the lender .
  2. Be a tactical buyer. If school districts won ’ t play a function in your kin for years, consider finding a home in a transition region ; possibly buying a newcomer family rather than a forever home. You ’ ll likely get a better home value and won ’ t need to borrow vitamin a much .
  3. Reduce debt ; even a small. Paying off — or down — a credit rating card or two can help in several ways. Your debt-to-income proportion will go down and you may even get a nice bump in your credit score .
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