Q:

How do you determine how much money you can borrow for a mortgage?

A:

Quick Answer

A borrower must assess his income, credit history, down payment, employment and residence history to determine how much capital is available from a mortgage loan, states U.S. Bank. Several online tools available through the Federal Housing Administration and Bankrate websites assist in calculating home mortgage loans and payments.

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How do you determine how much money you can borrow for a mortgage?
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Full Answer

The U.S Bank website provides a home affordability calculator to help home buyers determine how much they can borrow. Borrowers must consider costs associated with a mortgage, such as mortgage application fees. Common fees include appraisal fees, underwriting fees and credit reporting fees. Earnest money is also involved with a mortgage, and it represents the initial deposit to the seller. Finally, down payments impact mortgages, as a higher down payment offers a more favorable mortgage rate.

The Bankrate website offers an affordability calculator that requires a user to enter income, loan term, interest rate, property tax and home insurance. After entering the information, borrowers can view graphs related to total payments and use of available cash. The official FHA website also provides a borrowing calculator that considers salary and other income, property taxes, hazard insurance, credit card payments, loan term, and interest rate. Users can view results related to maximum affordable mortgage payment, estimated taxes, estimated insurance and total qualified loan amount.

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