Help determining how much mortgage I can afford

I could be wrong but I think lenders look at your bills not going over 45% of your income or something like that. At least that is what I was told from Wells Fargo.


I am sure most would agree if you ask a bank, they will say you can afford more than you "should".

Though if you are debt free and this is/will be your only debt, just make sure you don't get a note that is so large you couldn't mow grass to make the payment if you lost your job.

Google is your friend on these types of questions....

LINK /

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Figure out what your bills are going to be, make a budget, then enter in various amounts for the mortgage. Play with the numbers until you feel comfortable. When you get a monthly mortgage amount you feel comfortable, take that amount and see what you could borrow at that amount using various interest rates and loan lengths.

Just because an online calculator says you can afford a mortgage doesn't mean you can actually afford that muc

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This is the right answer. Lenders will loan you waaaaaaaaaaaaaaaaaaaaaaaaaaay more than you can really afford.

Also don't just consider the principle and interest. Find out what your property taxes will be. Also your homeowner's insurance will be a part of the mortgage also. Check to see if you need flood insurance. That bit me in the arse.

I was a first time home buyer and didn't really calculate these expenses. It added about $300 a month to the principal and interest. Luckily I could afford it, but it takes many by surprise......

This calculator is very, very simple to use. It's almost abacus like. It's my secret weapon I used for year's with customers.

Dr. Karl's Mortgage Calculator

My wife and I work and combined we're around $80K/year. I'm the bigger earner and the "typical" theory I used to give to clients was to triple your annual household income and that was the MAX you could afford.

For me that would be $240K and I can assure you I'm not touching that much housenote with a 50 foot pole. My wife and I are childless with a Chihuahua so we bought a small garden home.

We paid $144K for it and with a 3.625% 30 year fixed rate USDA Rural Development Loan, PITI is $804/month. Because we are over 80% LTV, this includes a small amount of Mortgage Insurance (or MI). It will reduce by $2/year until we reach 80% through appreciation or paying it down.

The rates are right around the same amount we paid, and she and I are both on the mortgage, the note, the title, etc.

You are a little different because your girlfriend isn't going to be on the note, the mortgage, title, etc. So your income will be smaller, but you are closer to my home's purchase price.

So keep my numbers in mind as you'll be somewhere in that neighborhood from a monthly note standpoint.

Best of luck.

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All of that, plus: furniture and window treatments. Okay, maybe you already own all the furniture you need for a while, but a new house generally doesn't come with curtains/blinds. Decent window coverings can run into serious money. Even plastic WalMart mini blinds for a whole house with lots of windows can add up to big bucks.

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This is absolutely correct. I moved in and realized I had no blinds. I got some nice wooden ones (fairly nice house, didn't want to go cheap) and that was a couple grand right there.

Don't get me started on furniture. You are probably going from an apartment to a house. You will not have enough furniture (more than likely). I bought the essentials (beds for all bedrooms, dining room table and chairs, living room furniture, etc.).

I bought the rest over the years here and there. Apply now for a zero interest credit card (you can usually get a year or so no interest). I put a bunch of shite on that and paid it off without ever paying any interest......

ETA: My house happened to come with a nice fridge. Most don't have one at all........

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(Seriously, that 20% down rule of thumb is ridiculous)

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20% down gives you a better interest rate with no PMI allowing your PITI to be much less of a monthly burden. In addition, having equity in your home allows you more flexibility in the event there is a downturn in the market. For instance, if you need to relocate, you won't need approval from the lender to sell the property short. If you put 5% down and the market goes down by 10%, you have to come to closing with the additional 5% (less any principle paid already). It is all about how much risk you feel comfortable living with not that one way is necessarily smart or dumb.

General rule is that the total price of the home Should not exceed households three years gross pay. I preferably attempt to keep all of my expenses limited to two weeks take home pay.

While I agree with avoiding PMI, it's really not necessary at all these days.

My wife and I just sold our townhouse and we are in the process of building our "dream home".

I'll probably break the money board with this one.

With all of our upgrades and changes we will come in around 343k. We make about 125k a year. We live solely off my salary and save every penny she makes.

We got 4% with lender paid PMI, putting 10% down. Expecting to have a 1500-1600 payment, which isn't an issue since we are used to paying an $800 mortgage plus saving my wife's income.

I'm sure some would say we got too much house, but we wanted to get something to grow into.