Mortgage calculators

How Much House Can You Afford – Calculator

How Much House Can You Afford?

 People some time find themselves buying a property they actually cannot afford during the whole mortgage life time. It is important to check in advance and calculate, which amount of money is needed in order to buy a house you can afford. 

Your main purpose then is to find out the most expensive house you can buy given your income and savings. This question is not only for financial stability, this question will help you know your purchase upper limits, so you do not pass hoses you think are too expensive for you, and do not try to buy homes which are way higher than you can afford.

Quick personal mortgage ability check

How much you can afford is a function of two things: How much you can borrow and how much down payment can you handle. Most people can afford a home that costs up to three times their annual household income, if they can make a 20% down payment and have only a moderate amount of other debt. 

How much down payment can you afford ?

The down payment –  is an easy figure to estimate concerning a mortgage loan, you need to know how much free cash and saving you have and plan to put as down payment. 0% down payment loans are more rare to find and qualify for. Usually a 3% is a minimum request. Most lenders will be more willing to lend you higher sums of money when you show 20% of the mortgage down payments. 20% down payments will save you the need for PMI (private mortgage insurance) freeing even more monthly payback money – which means more mortgage possibilities for you.

In case you already have other debts – like credit card debts, bank money loans still running, lenders will count them as part of your over all ability to pay back, and you will certainly get a smaller mortgage. Try to pay back all debts if you want the chance to afford an bigger home mortgage.

Secondary rental possibilities – When you get a home with a unit you can rent out, you can count the rent you’ll receive as income, lenders will count this extended income and be willing to provide you with a larger home loan.

30-year loans  - those long term home loans, usually have a low monthly payments (compared with the same amount payed back at a shorter term), since the monthly payment are lower and more affordable, you can get a higher mortgage (afford more house) when going for the jumbo loans.

Closing costs- since they need to be paid, the money can be deducted from the down payment (lowering the down payment % of the mortgage) or rolled into the mortgage loan, which means paying a higher loan, but getting a bit less money to buy the home you intended.

‘How much house can I afford’ calculator

To arrive at an “affordable” home price, we followed the guidelines of most lenders. We’ve allowed a total debt-to-income ratio of no more than 36 percent. And we have assumed a housing payment-to-income ratio of 28% for our conservative estimate, and 33 percent for the aggressive one.

The other aspects of the money borrowing

Here are some questions to ask yourself before buying a house with money you don’t yet have:  Do I actually need THIS house ? Is it the right property for me to buy at this stage in life ? Am I buying this house for the right reasons, or do I wish to impress others or prove something to my self esteem? Do I have any financial safety net ? what is my full asset allocation ? What other important goals do I have in life – study, renovate, travel. Can I afford some unexpected expenses like an emergency teeth medical care, an unwanted car repair, pay a handy man for a leaking water pipe repair job.

Remember a mortgage is a long term loan, it will be part of your life for 20-30 years, so some of the double checks you owe yourself regard the long term aspects as far as you can predict them. One factor is what other savings needs, including personal retirement needs, family plannings, children college you wish to support. A mortgage agreement includes other costs and fees, closing costs, lawyer fees, deed and title costs.

Every mortgage will need a private mortgage insurance (PMI), which you’ll owe if your down payment is less than 20 percent of the purchase price. It averages from $50 to $80 per month.

If you need first time buyer education, try to find a coarse at a place near you. This first time house buyer assistance can be a great help before your first property purchase. 

Two usefull tips:
1. Your monthly mortgage payment — including principal, interest, real estate taxes and homeowners insurance — should not be more than 28 percent of your gross monthly income (before taxes). This is your housing expense ratio.

 2. Make sure your total monthly debt obligation should not be more than 36 percent of your gross income. Those debts includes the mortgage payment plus other obligations such as car loans, child support and alimony, credit card bills, student loans, condominium association fees. (Note: Government and certain other lenders may be more lenient.) This is your debt-to-income ratio.

Interest Only Calculator

Interest Only Calculator

This Interest Only Calculator helps you compare interest only loans with fully amortized loans. An interest-only mortgage provides flexibility to the borrower in the early years of the loan.

what is an interest only mortgage

Interest only loans are for borrowers who have a good reason for preferring the lower initial required payment, and are prepared to deal with the consequences. With these loans you might be paying the interest for some years while the principle balance of the loan has not changed.

These loans allow people who estimate their earnings to grow substantially over the years, till the effect they can handle a 100% principal left untouched (with the IO mortgages) and start paying the principle at the end of the interest only period.

People need to figure can they sleep well with the risk that the expected higher income won’t materialize – when it comes to the principal payments.

If you know your way NASDAQ or Dow Jones, and plan to invest the free cash flow, then you will want for that as much free cash on your hands as possible. Using this interest-only mortgage, you can invest the cash flow and succeed as long as your investments ROI rates are higher than the mortgage rates. 

Interest-only rates mortgage info

The rates on interest-only loans can change as often as every month, or may be fixed for a 10-year period Recalculate your interest-only payment before your next scheduled rate adjustment.

Also, beware of balloon loans or negative amortization loans, where the amount you pay is not enough to pay the interest and the balance actually increases over time.

An “interest only loan” allows a person to pay a lower monthly mortgage payment at the beginning of the loan in order to save money (or to anticipate a larger salary) so that a higher monthly payment is more affordable later in the loan.

This Payment Responsive to Principal Reduction: On most IO loans, whether FRM (fixed rate) or ARM (adjustable rate), the monthly mortgage payment will decline in the month following an extra payment. This allowing people who have plans to pay out large parts of the mortgage (like after selling another house or receiving a large bonus) to reduce dramatically the monthly payments. This is the only type of mortgage that has this feature.

Risks of interest only mortgages

Borrowers can pay only interest, or can choose to repay some portion of the loan balance as they see fit. However, after interest-only payments for a period of years, the amount borrowed must be repaid over a shorter period of time, producing a significant increase in payments. On the other hand, lenders view interest only mortgages as riskier. because after any period of time has elapsed, the loan will have a larger balance (compared with regular loans). If it is riskier for the lender, it will have a higher price for you. 

FHA Loan Limits 2011 – Calculator

FHA Loan Limits calculator

FHA loans are designed for low to moderate income borrowers who are unable to make a large down payment. FHA loan limits vary based on a very large variety of housing kinds and the state and county in which the property is located.

The Federal Housing Administration (FHA) sets limits on FHA mortgage loan amounts that HUD will insure. Limits are set for both FHA-insured traditional forward loans and FHA-insured Home Equity Conversion Mortgage (HECM) reverse loans.

The FHA mortgage limits lists- can help you find out accurately what are the limits in your exact location, where the house is bought.

FHA mortgage limits 2010 checklist

Before you apply for an FHA home loan, you need to find and gather these documentation to be sent to the FHA underwriter, who will review your details and either approve or decline your request. 

1. The addresses of all your residences over the past two years. As mentioned before, the location is a factor the FHA considers as it has some social ways affecting the financial possibilities.
2. Your Social Security Number.
3. The names of your employers over the past two years. This is to know your former income rates, job position, professional experience.
4. Your current gross monthly salary. As this may count of your payback limits, income to mortgage ratio, principal at risk and more.
5. Names, addresses, and account numbers with balances on all checking and savings accounts. This asset allocation is important as a safety net, like a financial X Ray over all picture.
6. Addresses and loan information of any other real estate you owned. People who have owned property are probably in a different situation than those who are first time home-buyers.
7. Estimated value of your furniture and personal property. Some people apply for FHA loan help while they own cars and jewelery which is part of their financial strength.
8. W2′s for the past two years and current paycheck stubs.
9. Certificate of Eligibility and DD-214 (Veterans only). A Report of Separation is generally issued when a service member performs active duty or at least 90 consecutive days of active duty training.
10. Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business. Not similar to a salary worker who can show a last paycheck, self  employed have a roller coaster of income ups and downs. 
11. Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information

Know that your credit report is NOT needed. Even though, underwriters can make a more skilled decision about whether to approve you for an FHA Loan by looking at your credit score (FICO) to help them determine if you are in their eyes safe to be given government money, and evaluate whether you are likely to pay your FHA home loan on time

Here you can check your own FHA mortgage limit, The FHA Loan Limits calculator helps you calculate the size of the loan the FHA is willing to insure  when you apply for a home mortgage loan.

Also before applying, it is important to recognize whether or not you can make a 3% down payment on the house you are looking to buy.

 The Federal Housing Administration (FHA) provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.

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What is FHA Mortgage Insurance?

FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. The lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner’s default. Loans must meet certain requirements established by FHA to qualify for insurance. 

Mortgage Payment Calculator

Mortgage Payment Calculator

The Mortgage payment calculator widget is used to calculate the users payment based upon the interest rates and loan amount entered

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