'How Much House Can I Afford?' Calculator
Buying a house is seen as one of the most sentimental acts that a person or family can go through in their lifetime. Making a house into a home requires time, which is why many people are known to make sure that they take their time in deciding which house to purchase. The idea of purchasing a house is to make it your own, a place that you can call home, a place where you can grow old together with your partner, or a place where your kids can grow up. Whatever the reason, buying a house is seen to be quite special in any person's life for whatever reason that may be. Unfortunately, due to rising expenses and lower income payouts, it has made it quite difficult for individuals to be sure as to whether or not they can afford to buy one house over another.
This is where the "how much house can I afford calculator" comes into play. The great thing about this particular calculator is that it is free to use. It offers the same information that you would normally get by paying a financial advisor. The great thing about this particular calculator is that it is user friendly and easy to use. By entering in a few basic details such as the value of the property, the value of the loan, and other information in relation to the property, the calculator will tell you the desired income that would be needed for a person to be able to afford such a property.
SAMPLE: For example, if the home you are looking at costs $300,000.00 and you plan to put $30,000.00 down on a 30 year loan with a 5.000% interest rate, your total payment on the principal and interest will be $1,449.42. If your annual property taxes are $3,000.00 and your annual insurance is $1,500.00, that will bring your total monthly payment to $1,936.92. With a monthly payment of this amount, your total gross monthly income will need to be at least $6,456.39 in order to qualify for the loan.
Estimated front and back ratios helps you to limit your housing and necessary living spending.
Front ratio is a percentage of your gross income that you can spend on all housing related expenses, including property taxes and insurance. Back ratio is a percentage of your gross income that you can spend on your housing expenses plus cost of shelter: food, clothes, gas, etc.
Front / back ratios with values of 28-33 / 36-42 considered conservative these days, values bigger than 35 / 45 called aggressive and not recommended for use.
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