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How much can I afford?

Use the first calculator to figure out how much your monthly mortgage payment might be for a fixed-rate mortgage. Enter in the term of the loan in years, the percent interest and the total amount you wish to borrow. Let's suppose that you want to purchase a house that costs $80,000. If you make a $1,000 down payment, you would need a $79,000 mortgage. As you can see on the calculator, the monthly payment on a $79,000 30-year mortgage at 7 percent interest is $525.58.

Calculate Monthly Payment

Use the second calculator to figure out how much house you can afford. Input the amount that you are willing to spend on housing each month (no more than 30% of your monthly income is a general rule) and the interest rate for your mortgage loan to get the total loan amount for a house that you can afford. For example, if you make $25,000 a year after taxes that would be approximately $2,083 a month. Your affordable monthly housing payment would be $625, and at 7% interest on a mortgage loan you could afford to borrow $93,942.22 to buy a home.

Calculate Loan Amount

The monthly payment amount only covers the principal, or a portion of the amount you borrowed, and interest on the mortgage loan. There are other expenses that will be added to your monthly payment that should be considered. These include taxes and homeowner's insurance. If your down payment is less than 20 percent of the total house price, you may need to pay private mortgage insurance. These costs vary depending upon where you live and the cost of your home, but they can add a hundred dollars or more to your monthly payment. In addition, if you are thinking about buying a unit in a condo or cooperative building, or a house in a planned unit development, you may need to pay monthly homeowner's fees to cover maintenance expenses or special assessments related to the common areas. Consult your realtor on realistic estimations of these additional expenses.

© 2007 Workforce Housing.

Chapel Hill-Carrboro Chamber of Commerce Foundation for a Sustainable Community