Loan Affordability Calculator
Buying a home is one of the biggest financial decisions you’ll make. Our Loan Affordability Calculator provides an accurate estimate of your home affordability based on your income, debt obligations, and real-time OBMMI mortgage rates. Unlike other tools, our calculator allows you to compare 15-year and 30-year loan options side by side so you can make an informed decision about your home-buying budget.
Step-by-Step Guide
- Enter Your Monthly Gross Income – Your total monthly income before taxes.
- Input Monthly Debt Obligations – Include car loans, student loans, credit card payments, and any other recurring debt.
- Select Your Desired DTI (Debt-to-Income Ratio) – Adjust to see how different DTI thresholds impact affordability.
- Interest Rate (Pre-populated with Real-Time OBMMI Rates) – Defaults to current rates for 15-year and 30-year conventional loans, but can be adjusted.
After entering this information, the calculator will display:
- Maximum Monthly Mortgage Payment based on selected DTI.
- Comparison of Home Value, Loan Amount, Principal & Interest, and Taxes & Insurance for 15-year and 30-year loan options.
- Side-by-side comparison of affordability scenarios.
Home Affordability Breakdown (What’s Calculated?)
- Maximum Monthly Mortgage Payment = (Gross Income × Desired DTI) – Monthly Debt Obligations
- Home Value Estimate (For 15-Year & 30-Year Loans)
- Loan Amount Calculation = Home Value – Down Payment
- Monthly Principal & Interest Comparison (15-Year vs. 30-Year Loans)
- Estimated Taxes & Insurance = Default values based on home value but can be adjusted
- Side-by-Side Loan Comparison for long-term affordability planning
For a detailed breakdown of your monthly mortgage payments, check out our Amortization Calculator.
Understanding the Mortgage Affordability Formula
Our calculator applies a precise formula to determine home affordability:
Where:
- M = Max affordable monthly payment
- P = 80% of Home Value (Loan Amount)
- r = Monthly interest rate (Annual Rate ÷ 12)
- n = Total loan term in months (180 for 15 years, 360 for 30 years)
- 1.6% = Estimated Annual Tax & Insurance Rate
- Home Value x 1.6% / 12 = Monthly Taxes & Insurance
This formula ensures that you get an accurate estimate of your potential home price within your budget by incorporating loan payments, taxes, and insurance costs into the total monthly mortgage expense.
Why This Calculator Stands Out
Unlike basic home affordability calculators, ours:
- Uses real-time OBMMI rates for precise affordability estimates.
- Allows customization of DTI thresholds for personalized budgeting.
- Automatically compares 15-year & 30-year mortgage options side by side.
- Factors in property taxes & insurance for realistic monthly cost estimates.
- More comprehensive than lender calculators, providing a complete affordability picture.
Read More: Guide to Home Affordability
Understanding Debt-to-Income Ratios & Affordability
What to Do Next?
Explore Your Loan Options: Use Loan Compass for a detailed loan analysis.
Learn More: Check our Knowledge Hub articles to understand different affordability factors.
Final Thoughts
Our Loan Affordability Calculator gives you a clear picture of your home-buying power, factoring in real-time mortgage rates, debt obligations, and personalized affordability settings. Designed for homebuyers, realtors, and loan officers, this tool ensures transparency and accuracy when assessing home affordability.
Start Exploring Your Home Affordability Today!
