Home affordability calculator: How much mortgage can I borrow?

"Mortgage calculators how much can I borrow" help you figure out the maximum amount that you can borrow. However, the maximum borrowing amount depends upon the affordability factors that lenders look into. Such factors are:

• Monthly gross income: This includes your total monthly income including wages (if employed) and investment income prior to taxes and deductions. Any additional income (due to overtime, bonus, part time jobs, rental income, etc) is also taken into account.

  If you're self-employed, the loan amount will depend upon your net taxable income based on 2 years of business accounts. Lenders prefer you to have at least 2 years of business accounts in order to qualify for a mortgage.

• Annual Housing Expenses: This includes your annual property tax and home/hazard insurance premium. Property taxes are levied as a percentage of your assessed property value. Home/hazard insurance is what your lender requires you to purchase in order to keep your home protected from disasters like flood, hurricanes etc.
• Monthly debt obligations: These include your monthly payments towards credit cards, personal loans, auto loans and other debts. Lenders check 2 ratios - housing ratio and debt to income ratio which help to determine the maximum borrowing amount.

For example, suppose your total monthly income from all sources is $20,000. Let, your total annual housing expenses and other monthly debts be $500 and $200 respectively. Now, say the mortgage rate is 4% and you want to take out a mortgage loan with a term period of 15 years.

Then the maximum loan amount that you can borrow will be $751398 and your monthly mortgage payment will be $5558.