This calculator will help you determine the amount
of the mortgage loan that you will be able to afford. To calculate
your total monthly home loan payment, see our Payment
Calculator.
INSTRUCTIONS: Fill in the appropriate fields - THEN "TAB"
Do NOT use commas (,) or periods (.). The form will automatically
recalulate when you tab.
Click on any field for a hint.
Click on the field title for additional definitions.
Purchase Information - This is where you enter the home
selling price and loan information.
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Home Price - Enter the selling price of the home, don’t
use commas "," or periods "."
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Down % - The percentage of the home price you will be
putting as a downpayment.
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Loan Amount - Take the home price and subtract the downpayment.
This equals the loan amount.
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Interest Rate - Enter the rate of interest you want to
calculate with. Example for 7.25%, enter 7.25
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Term Years - Enter the number of years for the loan.
Normally use 30.
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House Payment Information - This area is for determining
the total house payment including property taxes, homeowners
insurance and mortgage insurance (if required). Adjust the numbers
in this section carefully or not at all.
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Principal and Interest - The portion of the payment that
pays off the loan balance (Principal) and interest on the balance,
over time.
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Prop. Tax Rate - Annual property taxes as a percentage
of the Home Price divided by twelve to get a monthly amount for
the total payment (Default takes $250,000 X 1.2 / 1200. This
works out to $3,000 annual property taxes for a $250,000 Home
Price or $250 per month). Even if you are not planning to have
property taxes as part of your payment, the lenders use it as
part of the debt ratios.
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Insurance Rate - Annual homeowners insurance as a percentage
of the Home Price divided by twelve to get a monthly amount for
the total payment (Default takes $250,000 X .17 / 1200. This
works out to $425 annual homeowners insurance for a $250,000
Home Price or $36 per month). Even if you are not planning to
have homeowners insurance as part of your payment, the lenders
use it as part of the debt ratios.
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PMI Rate - Private Mortgage Insurance. Do Not Change
this setting, it is set by the percentage down. This is insurance
required by the lenders when you put less than 20% downpayment.
It pays the lender if you default on the loan. The larger percentage
you put down, the less the monthly cost. There are loans you
can do with less than 20% down without PMI, even with
100% financing. For more information about PMI, give us a call.
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Total Payment PITI - This is the total house payment
including property taxes, homeowners insurance and mortgage insurance
(if required) that is used to determine your debt ratios for
qualifying.
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Pre-Qualifying Calculation - This is where you enter
your financial information and the debt ratios are determined
for the new purchase. To see maximum loan amount you qualify
for, keep raising the price until the "Maybe not..." message
appears. Then lower the price back down until the "It looks
like this will work" message appears.
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Annual Income - Enter your total combined annual income,
before taxes. Be sure to include any W-2 or self-employment income,
net rental income after payments, interest & dividends, child
support you receive (if any).
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Total Monthly Debt - Enter your total combined minimum
monthly debt payments. Be sure to include car payments, minimum
required credit card payments, installment debts, student
loans, spousal or child support you pay. Do not include car payments
that will be paid off within 10 months with normal payments.
Do not include food, utilities, insurances or other normal household
expenses.
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Debt Ratios - These numbers are important to the lender
for qualifying purposes and are the main purpose for this calculator.
The first number represents the Total Payment (PITI) on the house
as a percentage your gross (before taxes) monthly income. Guidelines
say this first number should be below 33%. It is common to get
approvals to 40%. The second number represents the Total Payment
(PITI) plus your Total Monthly Debt as a percentage of
your gross monthly income. Guidelines say this second number
should be below 38%. It is common to get approvals to 50%. Debt
Ratios can be a lot higher than the guidelines allow with compensating
factors such as a large downpayment (20% or more), high Credit
Scores (700+), large cash reserves in the bank and other factors.
There are loans that do not even consider debt ratios. In these
loans, you can have debt ratios over 1000% and still be approved.
Call us for help.
Debt Ratio examples:
An.
Income |
Mo.
Income |
Pymt.
PITI |
Mo.
Debt |
PITI
+ Debt |
Debt
Ratios |
| $50,000 |
$4,167 |
$1,125 |
$250 |
$1,375 |
27/33 |
| $84,000 |
$7,000 |
$2,330 |
$450 |
$2,780 |
33/40 |
| $37,000 |
$3,083 |
$975 |
$375 |
$1,350 |
32/44 |
| $68,000 |
$5,667 |
$1,525 |
$620 |
$2,145 |
27/38 |
|
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Can you buy this house? - This decision is made on this
calculator on the basis if you meet 40/45 Debt
Ratios according to the data you entered. This is not a guarantee
of a loan approval or denial. Many other factors go into this
decision. You need an experienced Loan
Officer to help make the final determination.
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Experience extraordinary...
Call Theresa Springer today at 360-210-7984 to
see the difference that working with an experienced home
loan professional can make for you.
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