How much house can I afford?
The home price your income supports under the standard lending guidelines, with Michigan property taxes and insurance counted in. A starting point before you talk to a lender.
How it's figured
The calculator finds the highest price where the full monthly cost, meaning loan payment, property taxes, insurance, HOA and PMI when you put down less than 20%, fits the lower of two limits: 28% of your gross monthly income, or 36% minus the debts you already pay. These are the classic conventional loan guidelines. FHA, VA and some conventional programs stretch past them, so a lender may approve you for more.
Property taxes are figured at a new owner's rate. In Michigan the taxable value resets the year after a sale, so budgeting with the seller's current bill can understate your payment by hundreds a month.
Questions
How much house can I afford on my income?
Most conventional lenders want your housing payment (loan, taxes, insurance, HOA and PMI) at or under about 28% of your gross monthly income, and all your monthly debts including housing at or under about 36%. FHA and some programs allow more. This calculator uses the lower of the two.
Do lenders count student loans and car payments?
Yes. Monthly payments on car loans, student loans, credit card minimums and other installment debts count toward the 36% total. Utilities, phone bills and groceries don't.
Should I buy at the top of what I qualify for?
Not necessarily. Qualifying numbers don't know about daycare, savings goals or the furnace that will need replacing. Many buyers set their own ceiling below the lender's.