Home Affordability Calculator

See the Help worksheet for instructions and disclaimer. © 2016-2019 Vertex42 LLC

Income Estimated Home Price

Gross Annual Income (before tax) 65,000.00 .
Maximum Housing Expense % 28% . $207,708
(M1) Max Monthly Payment Based on Income 1,516.67

Monthly Debts
Car Loans 300.00 .
Credit-Card Minimums 100.00 . $1,268
Student Loans - . / month
Child Support & Other Obligations - .
Other Mortgages - .
Other Loans - .
Current Monthly Debts $ 400.00
Maximum Debt-to-Income Ratio 36% . PI Payment 793.31
(M2) Max Monthly Payment Based on DTI 1,550.00 Property Tax 350.00
Insurance 75.00
Maximum Monthly Payment (lower of M1,M2) $ 1,516.67 PMI -
HOA 50.00
Monthly Housing Expenses Other -
Property Tax (Monthly) 350.00 .
Home Owners Insurance (Monthly) 75.00 . Loan Amount
PMI (private mortgage insurance) - .
HOA Fees 50.00 . $166,167
Other (Utilities, Repairs, etc.) - . Down Payment
(M3) Max PI Payment Based on Expenses 1,041.67
$41,542
Available Funds Est. Closing Costs
Available Funds 50,000.00 ◄
Fixed Closing Costs 150.00 ◄ $8,458
Variable Closing Costs (based on price) 4.00% ◄
Minimum Down Payment 20.00% ◄ "◄" points to limiting factors
Maximum Home Price Based on Funds 207,708.33
(M4) Max PI Payment Based on Funds 793.31

Maximum PI Payment (lower of M3,M4) $ 793.31

Financing
Term of Mortgage (years) 30
Annual Interest Rate 4.000%
Loan Amount Based on Max PI Payment 166,166.67 .
Down Payment Based on Available Funds 41,541.67 20.0%

Total Estimated Closing Costs 8,458.33 4.1%

Maximum Home Price $ 207,708.33

Depreciation
% of Home Price Depreciable 60.0%
Years to Depreciate 27.5
Annual Depreciation (straight-line) 4,531.82
HELP
https://www.vertex42.com/Calculators/home-affordability-calculator.html © 2016-2019 Vertex42 LLC

Instructions

For a detailed explanation of how the calculator works, return to the page
listed above.

Some of the main factors to consider when estimating home affordability are your
monthly income, down payment and closing costs, monthly expenses, your credit
score and amount of debt you owe, other savings goals, housing market, income
stability, and ease of mobility.

This calculator does NOT consider all these factors. Like most online mortgage
affordability calculators, it is based mostly on your income, debt-to-income ratio,
available funds, and estimates of common housing expenses.

Warning: People commonly use calculators like this to purchase the largest
house they can, but that is often a big mistake. This calculator should only
be used for educational purposes and definitely NOT as financial advice.

A note about worksheet protection: The Affordability worksheet is protected to

help you avoid accidentally entering a value over the top of a formula. You can go
to Review > Unprotect Sheet if you feel confident that the changes you will make
won't mess stuff up.

Income If your annual income is complicated, you can look at your previous tax return and
enter your adjusted gross income as your income. This may not be exactly what
your lender uses.

28/36 Rule
Many lenders use the 28/36 rule to determine a couple maximums. The first is
that the maximum housing payment cannot be greater than 28% of your monthly
income. The second is that the debt-to-income ratio cannot be greater than 36%.

DTI The debt-to-income ratio is calculated as Total Monthly Debt / Gross Monthly
Income.

Property Enter the monthly property tax. You may need to iterate on this value, because
Tax the tax depends on the home value. You can look up the property tax payments
for specific homes online.

Insurance Homeowner's insurance also depends on the home price, so make sure to adjust
this value after you calculate the home price.

PMI Private mortgage insurance is usually required if the down payments is less than
20%, and the cost may be about 0.5% to 1% of the loan amount per year.

HOA Fees HOA fees are usually a set monthly payment and they vary depending on the
neighborhood.
Other Fees Include estimates of the monthly costs associated with home ownership, such as
utilities, repairs, maintenance, etc.

Available When buying a property, you need funds to cover both the closing costs as well
Funds as the down payment.

Closing
Closing costs can vary a lot, so find out what the costs will be from your real
Costs
estate agent. Some closing costs my be fixed, while other closing costs are
calculated as a percentage of the home price. If you know these values, you can
enter them.

Minimum If you choose to set the minimum down payment to less than 20%, you will likely
Down have to pay PMI. This calculator doesn't handle the case where you get a
secondary loan instead of making a down payment. In that case the interest rate
for the secondary loan would be higher, so if you want a really rough estimate,
you could try setting the minimum down payment % to zero and entering an
interest rate somewhere between the rates for the primary and secondary loans.

PITI vs. PI When referring to a mortgage payment, PITI stands for Principal + Interest +
Payments Taxes + Insurance and PI is therefore just the Principal + Interest portion. That is
important because the Loan Amount is calculated only from the PI portion. The
institution that services your mortgage will hold the tax and insurance portion of
your payment in escrow and pay these bills for you.

Related Resources

► Home Mortgage Calculator

► Money Management Template

► Family Budget Planner

► Debt Reduction Calculator

Home Affordability Calculator

By Vertex42.com
https://www.vertex42.com/Calculators/home-affordability-calculator.html

© 2016-2019 Vertex42 LLC

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