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## The HSH Blog

Mortgage & Housing Market News from HSH.com
January 6th, 2011 (Modified on June 4th, 2013)

# Find out exactly how much home can you afford

When you begin to ponder the idea of homeownership, you must first ask yourself, “How much home can I afford?”

HSH.com has a mortgage calculator just for that. Our “How Much House Can I Afford” Calculator can give you an accurate sense of almost all your homebuying expenses. The calculator is simple and easy to use — just fill in the seven required fields and hit the “Click Here to Calculate” button.

Here’s how the calculator works (I’ll provide some examples):

Annual Income: Simply plug in your household’s yearly income (example: \$90,000).

Monthly Credit Payments: Here’s the space where you enter in all your monthly bills — i.e. automobile and insurance payments, average credit card payments, student loans, electric, etc. (example: \$1200).

Cash Down Payment: The default setting here is \$20,000. Often times \$20,000 doesn’t equal a 20 percent downpayment. If that’s the case, the final calculation will take private mortgage insurance into account (example: \$20,000).

Property Taxes (percentage): The default setting on the calculator is one percent (1% = \$1,000 per year for a \$100K house). Let’s say you’re looking at a property worth \$298,000, with annual property taxes of \$6,500. To calculate the percentage of your yearly property taxes (for this calculator’s purposes), divide 298,000 by 6,500, then divide 100 into that number. The result is 2.18 (example: 2.18%).

Property Insurance (percentage): The default setting on the calculator is 0.5 percent. Until you really begin looking for a home, it may be hard to estimate what your property insurance will be. For this example, let’s stay with the default setting (example: 0.5%).

Interest Rate: At the close of business Wednesday (01/05/11), the 30-year Conforming rate finished at 4.90 percent. Note: this rate is with zero points and is for good credit quality borrowers. Those with lower credit scores are likely to encounter higher interest rates (example: 4.90%).

Loan Term (in years): The default setting here is 30. The most common loan term on the market these days is 30 years (example: 30).

Based on the examples we provided, below is the results of the amount of home you can afford (just as it is displayed by our calculator):

#### Don’t forget all those closing costs and points too!

HSH.com’s “How Much House Can I Afford” Calculator” is a great tool for homebuyers. This calculator is able to provide you with an accurate gauge of your affordability before you even begin to shop around.

### 2 Responses to “Find out exactly how much home can you afford”

1. Tweets that mention Find out exactly how much home can you afford | HSH Financial News Blog -- Topsy.com Says: January 7th, 2011 at 11:00 pm

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2. WilliamATuning (William A. Tuning ) Says: January 8th, 2011 at 3:35 am

Find out exactly how much home can you afford – http://blog.hsh.com/index.php/2011/01/find-out-exactly-how-much-home-can-you-afford/

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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#### Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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