![]() ![]() ![]() If you use our mortgage calculator and plug in a home value of $198,000 with a 20% down payment at a 5% interest rate, you’ll find that your maximum monthly payment of $1,250 jumps to $1,506 when you add in $182 for taxes and $71 for insurance. I know that sounds like a lot to keep track of, so let’s look at an example. And if you’re looking at a home that’s part of a homeowners association (HOA), you’ll need to factor in those lovely fees as well. If your down payment is less than 20%, you’ll need to add private mortgage insurance (PMI) fees to your monthly payment too (we’ll explain that more later). Remember: This is just a ballpark figure! Don’t forget that grown-up stuff like property taxes and home insurance will top off your monthly payment with another few hundred dollars or so. To save yourself the time and headache of doing a ton of math, use our handy-dandy mortgage calculator. See how much house you can afford with our free mortgage calculator! But if you're anything like me, you probably broke a sweat just reading that formula. Sure, you could crunch the numbers yourself by dividing a home price by 180 months (that's a 15-year mortgage) and then multiplying the decreasing monthly principal balance by your interest rate. Use our mortgage calculator to determine your home budget. Stick to that number and you’ll have plenty of room in your budget to tackle other financial goals, like investing for retirement or saving for your kid’s college.Ģ. ![]() (That includes the principal, property taxes, HOA fees, etc.) According to the 25% rule I mentioned, that means your monthly house payment should be no more than $1,250. Let’s say you earn $5,000 a month (after taxes). I want your home to be a blessing, not a curse. Following this rule keeps you safe from buying too much house and ending up house poor. To calculate how much house you can afford, use the 25% rule: Never spend more than 25% of your monthly take-home pay (after tax) on monthly mortgage payments. To calculate how much home you can afford, simply follow these five steps. After all, shopping for your “home sweet home” will feel very unifying and exciting once you both have a shared vision. You need to be on the same page when it comes to your budget and what’s realistic for your money situation. (I’ve never lost a patient!)Īnd for you married folks, make sure you and your spouse look at the results together. To figure out how much house you can afford, all you need to do is crunch a few numbers. This calculator will provide good results but you may want to also talk to your loan provider to get a calculation from them.How to Calculate How Much House You Can Afford (payment = principal + interest) Monthly Extra the extra amount you plan to add to your monthly payments on this mortgage. This value is not always easy to find but usually you can look at your last statement to find the amounts applied to principal and interest and add these 2 numbers together. DO NOT include insurance or taxes or escrow payments these are not applied to your loan. Current Monthly Mortgage Payment the amount currently to be paid on this mortgage on a monthly basis toward principal and interest only. Note that this is the interest rate you are being charged which is different and normally lower than the Annual Percentage Rate (APR). To also run scenarios for new payments by changing the loan term tryĬurrent Mortgage Balance the outstanding principal when calculating a current mortgage or the original amount on a new loan Interest Rate the annual nominal interest rate or stated rate on the loan. (negative extra payments to pay less) Create an amortization schedule. Use this calculator to calculate repayment of your mortgage and add extra payments to find how much it reduces the length of your loan term and the amount of interest you can save over the life of the mortgage. ![]()
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