# How Much House Can I Afford Calculator - Check Your Loan Affordability

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If you'd like to find out whether you can afford a mortgage on your home, use the How much house can I afford Calculator. This calculator helps you to calculate and find out how much mortgage you can afford with your monthly income.

How to use the Calculator

The Calculator works such that you have to enter the mortgage amount you wish to take out, the loan repayment period, mortgage rate, annual property tax in dollars and the monthly payment on other debts such as auto loans, personal loans and credit cards etc.

The How much house can I afford calculator or How much mortgage can I afford Calculator will compute the result and give you the monthly loan payment including principal and interest, your total monthly debt payment (including payments on mortgage and other obligations) and the monthly income you need to pay off the desired amount of mortgage.

An example on how to find out if you can afford a mortgage

Let's say that you need a loan amount of \$100,000 for a period of 10 years.

The mortgage rate = 6.5%

Annual property tax = \$1500

Using How much house can I afford Calculator, you get:

Monthly mortgage payment (principal interest) = \$ 1135.48

Total monthly debt payment = 5260.48

The monthly income that you require for mortgage payoff = 15029.94

The above calculation implies that if your monthly income is around \$15029 or even more, only then you'll be able to afford a mortgage amount worth 100,000 for a repayment period of 10 years.

Key factors that affect how much you can afford

Most calculators on “How much mortgage can I afford" take into account key factors such as the Front Ratio and Back Ratio. Here's some more detail about the 2 ratios:

Front Ratio: This ratio gives you an idea of what percentage of your gross monthly income goes towards the total monthly house payment including mortgage and any other housing cost. It is determined by the total monthly house payment divided by your gross monthly income. The standard ratio preferred by lenders is 28%.

Back Ratio: This ratio tells you how much of your gross monthly income should be spent towards the total monthly debt payment. It is calculated by dividing the total payment on all your debts (including house payment and other debt obligations) by the gross monthly income. The standard ratio preferred is 36%. However, in areas with higher home prices, lenders may allow for a higher ratio, sometimes as high as 45%. But a higher ratio often means a high interest rate on your loan.

Thus, the 2 ratios affect the calculations carried out by How much house can I afford Calculator and hence influence your mortgage affordability.

Samantha Taylor is a contributing Financial Writer, Moderator and Community Mentor of MortgageFit. She has been an active participant in the forums wherein she offers mortgage advice and suggestions to people in loan problems. If you have a query on any mortgage/real estate related issues, you can simply discuss it with her in the Mortgage Forum.

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