Know how much you can afford
We’ll help you estimate how much you can afford to spend on a home.
- Compare current rates in 92037, La Jolla, CA
- How affordability is calculated
As you set out on your home search, it is important to know the following:
- What kind of home you want and can afford
- How much mortgage you can qualify for
- How much you monthly payments will be
- How much you need to save for a down payment
The most important factors that determine how much you can afford:
- Your monthly payments which included house hold expenses, mortgage payment, home insurance, property taxes, auto loans and any other financial considerations.
- How lenders determine what you can afford. Just like lenders, our Affordability calculator looks at your Debt-to-Income Ratio (DTI) to determine what home price you can afford.
Common terms
Borrower
A borrower is a person who takes out a loan from a lender. For a mortgage loan, the borrower often is also referred to as the mortgagor (and the bank or lender the mortgagee).
Conventional loans
A conventional loan is a type of mortgage that is not insured or guaranteed by the government.
Debt payments
Debt payments are payments you make to pay back the money you borrowed.
Gross monthly income
Gross monthly income is the total amount of money you earn in a month before taxes or deductions.
Lender
A lender is a financial institution that provides a loan directly to you.
Monthly Budgets
A monthly budget is what you estimate your income and expenses are for a given month.
Mortgage affordability calculator
Use this tool to calculate the maximum monthly mortgage payment you’d qualify for and how much home you could afford.
Private mortgage insurance (PMI)
If your down payment is less than 20 percent of your home’s purchase price, you may need to pay for mortgage insurance. You can get private mortgage insurance if you have a conventional loan, not an FHA or USDA loan. Rates for PMI vary but are generally cheaper than FHA rates for borrowers with good credit.
The Federal Housing Administration (FHA), FHA Loan
The Federal Housing Administration (FHA) is an agency of the U.S. government. An FHA loan is a mortgage loan that is issued by banks and other commercial lenders but guaranteed by the FHA against a borrower’s default. FHA loans make home ownership more possible for borrowers than it otherwise would be through conventional mortgage loans, because an FHA loan permits relatively low down payments, limits closing costs the borrower pays and is accessible to borrowers who have a relatively lower credit score. These features make an FHA loan particularly useful for many first-time homebuyers who have not yet saved enough for the amount of down payments that commercial lenders usually require for a conventional loan.
Veterans Affairs Department (VA), VA loan
The Veterans Affairs Department (VA) is an agency of the U.S. government. A VA loan is a mortgage loan that is available to current and former members of the military (and select military spouses), issued by banks and other commercial lenders but guaranteed by the VA against a borrower’s default. VA loans make home ownership more possible for borrowers than it otherwise would be through conventional mortgage loans, primarily because a VA loan does not require any down payment. Additionally, interest rates offered for VA loans often turn out to be lower than those offered for conventional loans.