Can You Afford That Perfect Home?
Let’s Find Out
Get a clear picture of how much mortgage you can afford based on your income, expenses, and financial situation.
How to Use This Mortgage Affordability Calculator
Enter Property Information
Enter Your Income & Expenses
Review Your Mortgage Affordability Results
Need a More Accurate Estimate?
Our Mortgage Affordability Calculator provides a great starting point, giving you an estimate of how much you can borrow.
But when you’re ready for a more precise number, we can help.
Get personalized guidance based on your actual financial situation, explore ways to improve your affordability, and secure expert advice to help you move forward with confidence.
Frequently Asked Questions (FAQs)
If your affordability estimate is lower than expected, there are a few ways to improve it:
1. Increase your down payment by saving longer, exploring first-time homebuyer programs, or leveraging family gifts.
2. Boost your income by taking on additional work, renting out part of your home, or negotiating a raise.
3. Pay off existing debts to free up more income for mortgage payments.
4. Improve your credit score to qualify for better mortgage terms.
5. Consider a longer amortization period to reduce monthly payments (where permitted by lenders).
Lenders rely on two key ratios:
1. Gross Debt Service (GDS) Ratio: The percentage of your gross income that goes toward housing costs, such as mortgage payments, property taxes, and heating expenses. This should generally not exceed 32%.
2. Total Debt Service (TDS) Ratio: The percentage of your gross income used for all monthly debt obligations, including housing costs, credit card payments, car loans, and other debts. Lenders typically require this to be under 40%.
Additionally, you must meet federal stress test requirements, proving you can afford your mortgage payments even at a higher qualifying interest rate.
Your down payment plays a crucial role in determining your mortgage terms:
A minimum 5% down payment is required for homes under $500,000, while properties over this amount require higher down payments.
A larger down payment reduces your mortgage amount and monthly payments.
If you put down less than 20%, you will need mortgage default insurance, increasing your costs.
A 20% or higher down payment eliminates the need for insurance but may result in a slightly higher mortgage rate from some lenders.
A mortgage pre-approval provides proof that you are financially ready to purchase a home, which gives real estate agents and sellers confidence in your ability to close a deal.
It also prevents you from wasting time looking at properties outside your budget.
A pre-approval can lock in an interest rate for up to 120 days, protecting you from rate increases.
Processing times can range from minutes to weeks, depending on your financial situation. I can help you secure a pre-approval quickly so you can shop with confidence.