CNET Mortgage Calculator: How Much Home Can You Afford

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The CNET Mortgage Calculator can help you figure out how much home you can afford by gathering some basic financial information, breaking down some regional home sales data, and calculating your estimated monthly mortgage payment. (Please note that the information collected is only used to calculate your monthly payment – not for marketing or ad targeting purposes.) Please be aware that this calculator can only provide a rough estimate and your actual monthly payment (and other related costs) will depend on your specific financial situation, ownership, state of residence and the specific conditions of your lender.

How our mortgage calculator works

Our mortgage calculator uses your zip code to estimate the property tax rate and your credit rating to estimate mortgage interest rate… It uses your monthly income and your current monthly debt payments to calculate the monthly payments you can afford to stay below your DTI target. Finally, the calculator subtracts your other estimated monthly expenses, such as real estate taxes and homeowner’s insurance, to determine your monthly housing budget and the total home value you can afford.

Formula used: Monthly payment = (income x DTI) – debt – tax – insurance.

How a mortgage calculator can help you

A home is the largest purchase most people make. And since costs are usually spread over a period of 15 to 30 years, it can be difficult to determine how much home you can afford from the start. Our mortgage affordability calculator uses your financial information to calculate an estimate. One of the benefits of our calculator is that it already takes into account monthly expenses like property taxes and insurance, which may not be part of your monthly mortgage payment, but still contribute to your monthly housing costs. Again, please note that this calculator can only provide a rough estimate.

Additional costs of home ownership

Along with principal, interest, taxes, and insurance (also known as PITI), there are several other homeownership costs to consider in your budget.

  • Closing costs: When you close your new home, you are likely to incur closing costs of 2% to 5% of your total mortgage.
  • HOA fees: Depending on the location of your new home, you may be charged homeowners or condominium association fees every month, quarter, or year.
  • Maintenance and repair: When you own a home, maintenance and repair costs are inevitable. You will also need to factor this into your budget. Most experts recommend saving 1% to 2% of your home’s value on annual maintenance.
  • Utility bills: Chances are good that you are already paying utility bills in your current home. But remember that moving to a new home, especially if you are moving from apartment to house, can lead to significantly higher costs. electricity, heat, natural gas and water

Next steps in the home buying process

Once you know how much home you can afford, you can start mortgage pre-approval process and start a home search. Your lender will use more detailed information than our calculator, so your actual availability may vary slightly. And don’t forget to shop around to make sure you’re getting best affordable prices

Home Buyers Glossary

When you new to buying a homesome of the terms may be unfamiliar to you. We’ve put together some of the common terms associated with buying a home to help you understand the process.

Annual interest rate: Your annual interest rate is a combination of your interest rate and any commissions from the lender.

Credit rating: Your credit score in essence, it is your credit rating. It tells lenders how likely it is that you will repay the loan. Generally, the higher your credit rating, the lower your interest rate.

DTI Ratio: Your debt to income ratio is your monthly debt payments divided by your monthly income. It shows lenders what percentage of your income goes into debt each month. The highest DTI you can have for a mortgage is 43%, although most lenders prefer a DTI of 36% or less.

An initial fee: Your down payment is the amount you pay in advance for your home, which is shown as a percentage of the purchase price. Most lenders require a 3% to 5% down payment, although a down payment of at least 20% will not lead to a withdrawal from private mortgage insurance.

Homeowners insurance: Homeowner insurance is a type of insurance that compensates you for losses if your home is damaged or destroyed. Most mortgage lenders require borrowers to have homeowners insurance.

Income: To qualify for a mortgage, lenders usually use your gross income, which is your income before taxes or other deductions.

Mortgage term: The term of your mortgage is the number of years in your mortgage. Most mortgages have a 30-year term, but you can also get a 15- or 20-year term.

PETE: PITI stands for Principal, Interest, Tax and Insurance — the four components of your monthly housing costs.

Property tax: Real estate taxes are paid to local authorities. The amount you pay depends on the value of your home and the property tax rate in your area.

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