Deciding on a budget is the first step toward purchasing a home. This calculator helps you learn how much you can borrow. Simply fill in all entry fields, and then click on the "View Report" button to see a full amortization (pay-off) schedule for your mortgage payments.

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Definitions

Annual income

This is the amount of money you make in a year, before taxes are taken out. For married couples, this is you entire combined annual pre-tax income.

Purchase price

The price of the house you want to buy. This is the real price you'll pay, and doesn't include closing costs.

Total monthly payment

The total monthly payment amount for which you may qualify. This is the monthly total of principal, interest, taxes, and insurance; commonly called PITI.

Cash on hand

This refers to the cash you pay for the down payment and closing costs.

Interest rate

The current rate of interest you pay on your mortgage per year (APR). This is the rate which is charged or paid for the use of money. It is expressed as an annual percentage of the principal. It's calculated by dividing the amount of interest by the amount of principal.

Term in years

The length of time it will take to repay this loan. Popular mortgage terms are 15 years and 30 years.

Property tax rate

This is the rate at which your piece of property is taxed. For example, a 1% tax rate for a $100,000 houses comes to $1,000 in property taxes per year.

Home insurance rate

This is the rate of insurance interest on your home. 0.5% for a $100,000 house equals $500 insurance on the home per year.

Monthly car payment(s)

Total amount you pay on your car loan each month.

Credit card payments

The minimum amount you pay on all your credit accounts each month.

Other loan payments

All payments made on additional installment loans, including student loans and unsecured loans (loans where you did not put up collateral, like credit cards).

Total closing costs

Total upfront amount to close your loan. This amount includes your loan origination fee and any additional closing costs.

Loan origination rate

The rate the lender makes you pay for its origination fee (points). A 1% rate for a $100,000 home equals $1,000.

Number of points paid

This is the total number of points (origination fees) paid to lower your mortgage interest rate. Each point equals 1% of your mortgage balance. So, if you are paying 3 points on a $100,000 mortgage, you'll pay $3,000.

Other closing costs

A rough figure for the additional closing costs for this loan. This usually involves filing fees, appraiser fees, and all other miscellaneous fees paid.

Monthly PMI payment

This is the total amount you pay each month for Principal Mortgage Insurance (PMI). For loans where you make less than a 20% down payment, PMI is calculated as 0.5% of your loan balance each year. To learn your monthly PMI, multiply your starting loan balance by this percent, then divide that total by 12. Your PMI will equal 0 when your house's equity (the amount of the home you own free-and-clear) is greater than 20% of the total purchase price. Be aware that this is merely an estimate of your actual PMI. Your payment amount may vary from this estimate.

Monthly PI payment

The amount of principal and interest (PI) you pay each month.

Total for down payment

After you pay closing costs, this is the remaining amount of funds available for down payment.

Limit down payment

This term refers to refers to lowering the down payment percentage to an amount that will eliminate the need for Principal Mortgage Insurance (PMI) payments. Checking this box will lower your down payment to the minimum amount needed to bypass the PMI, even if you have more on-hand cash than you need for closing costs.

Show schedule by month

When you press the "View Report" button, you are shown the monthly payment schedule.

Show schedule by year

When you depress the "View Report" button, you see the yearly payment schedule.

Total annual income debt percentage

Not shown here. This is how much of your annual income (expressed as a percentage) lenders let you use for loan payments. Such payments include: car, credit cards, additional loans, and your "Principal, Interest, Tax and Insurance" payment for your home. Your debt-to-income ratio usually cannot be more than 36%.

PITI annual income percentage

Again, not shown here. This is the percentage of your yearly income that your lender lets you pay out for your "Principal, Interest, Tax and Insurance" on your house. Your debt-to-income ratio is usually not allowed to be higher than 28%.

Qualify amount

This is shown as "Total Monthly Payment." Represents the total monthly amount for which you qualify. It's the total of Principal, Interest, Tax and Insurance" for your house.