🏡 Mortgage Affordability Calculator

Quick answer: $100K-120K depending on debts and down payment.

Detailed breakdown with 20% down ($80K):

Monthly costs on $320K loan at 7%:

• P&I: $2,129
• Property tax (1.2%): $400
• Insurance: $150
• Total: $2,679/month

Income needed (no other debts):

• $2,679 ÷ 0.28 = $9,568/month
• Annual: $114,816

With existing debts:

• $500/mo debts = need $107K income
• $800/mo debts = need $125K income
• $1,200/mo debts = need $150K income

With 10% down ($40K):

• Loan: $360K
• P&I + tax + ins + PMI: $3,100/mo
• Need $133K income (no debts)

With 3.5% FHA ($14K down):

• Loan: $386K
• Payment: $3,200/mo
• Need $138K income

No! Here's why comfortable ≠ maximum:

Lender approves you for $400K home:

• Payment: $2,800/month (including tax/ins)
• 43% of your gross income
• Feels like a lot every month

What lenders don't consider:

• 401(k) contributions (15% = $1,000/mo)
• Childcare ($1,200/mo)
• Car insurance ($150/mo)
• Food, gas, utilities ($1,000/mo)
• Health insurance ($400/mo)
• Life insurance, phone, etc ($200/mo)
• Savings goals ($500/mo)
• Total: $4,450/mo not in debt calculations!

Better approach - 25% rule:

• Keep housing at 25% of gross income
• $7,000/mo income = $1,750 housing max
• Can afford $280K comfortably vs $400K stretched

Real example:

John makes $100K, approved for $450K

• Payment: $3,200/month
• After taxes: Take-home $6,200
• After housing: $3,000 left
• After 401k, insurance, car: $1,500
• For everything else: Tight!

John buys $350K instead

• Payment: $2,500/month
• Take-home: $6,200
• After housing: $3,700 left
• Can save, travel, enjoy life

Realistic range: $140K-180K depending on debts.

$50K income breakdown:

• Gross monthly: $4,167
• Max housing (28%): $1,167/month
• Max total debts (43%): $1,792/month

No existing debts, 20% down:

• Can afford: ~$180K home
• Down payment: $36K
• Monthly: $1,150 (P&I, tax, insurance)

With $300/mo debts:

• Available for housing: $1,492 - $300 = $1,192
• Can afford: ~$140K home
• Down payment: $28K
• Monthly: $1,100

With FHA (3.5% down):

• Can afford: ~$160K
• Down payment: $5,600 (much more accessible!)
• Monthly: $1,400 (higher due to PMI)

Challenges at $50K income:

• Tight budget for maintenance
• Hard to save emergency fund
• Little room for income disruption
• Consider waiting until $60K+ income

Yes, but with conditions - must be consistent:

What lenders will count:

1. Guaranteed overtime (2+ year history):

• Must show on tax returns
• Average last 2 years
• Example: $15K overtime annually = $1,250/mo extra

2. Regular bonuses (2+ year history):

• Annual bonus: Average of last 2 years
• $10K bonus = $833/mo added to income
• Must be continuing (get letter from employer)

3. Commission (2+ year history):

• Average of past 2 years
• If increasing: Use recent year
• If declining: May not count or average lower

What lenders WON'T count:

• One-time bonuses (signing, retention)
• Overtime under 2 years
• Irregular income
• Expected raise (doesn't count until you have it)

Documentation needed:

• Last 2 years W-2s
• Last 2 years tax returns
• YTD paystubs
• Employer letter (confirming continuation)

Example approval:

Base salary: $60K

• Overtime last 2 years: $12K, $15K
• Average: $13.5K = $1,125/mo
• Lender income: $60K + $13.5K = $73.5K
• Qualifies for $280K vs $230K on base alone
• Gain: $50K more buying power

Yes, but lenders are conservative - expect 75% rule:

Conventional loans:

• Can use 75% of projected rent
• $2,000/mo rent = $1,500 counts toward income
• Must provide lease or appraisal of rent value
• If negative (rent < mortgage), counts against you

FHA loans:

• More strict: Often require 2-year history as landlord
• First-time investors: Hard to use rental income
• Exception: Duplex (living in one unit)

VA loans:

• Similar to conventional (75% rule)
• Must have 6 months reserves (PITI)

Example scenarios:

Scenario A: Buying duplex, living in one unit

• Rent other unit: $1,500/mo
• Lender counts: $1,125/mo income
• Your mortgage: $2,800/mo
• Net cost to you: $1,675/mo
• Easy to qualify!

Scenario B: Buying single-family rental

• Projected rent: $2,000/mo
• Lender counts: $1,500/mo income
• Need to qualify for $2,200 payment + $1,500 "income"
• Net: Must qualify as if payment is $700/mo
• Plus: Show reserves for both properties

First rental property tips:

• Buy duplex/triplex, live in one unit (easiest)
• Or: Qualify on your income alone
• After 2 years rental history: Much easier to expand

Combining incomes is powerful - but combines debts too:

Both on the loan (recommended if both have good credit):

Advantages:

• Combined incomes = much more buying power
• Both build credit history
• Both have ownership rights
• Stronger application

Disadvantages:

• Both debts count (his student loans + her car)
• Lender uses lower credit score for rate
• Both responsible for payment

Example: Combined is better

Person A: $70K income, 780 credit, $200/mo debts
Person B: $60K income, 740 credit, $400/mo debts

Separate (A only):

• Income: $70K
• Can afford: $280K
• Rate: 6.5% (780 credit)

Combined:

• Income: $130K
• Debts: $600/mo
• Can afford: $420K
• Rate: 6.75% (lower credit score applies)
• Gain: $140K more buying power, worth 0.25% rate hit

When to keep separate:

Person A: $90K income, 800 credit, $0 debts
Person B: $45K income, 620 credit, $1,000/mo debts

A only:

• Can afford: $380K
• Rate: 6.25%

Combined:

• Income: $135K
• Debts: $1,000/mo
• Can afford: $350K (debts kill it)
• Rate: 7.5% (bad credit)
• Better: Use A only, refinance later when B's credit improves