If you are new to mortgages and monthly payments, it can be a scary experience. Luckily, we’re here to help you calculate what monthly payment you can afford. An easy guideline is to follow the 43% rule: your total debt each month should stay below 43% of your gross income, or your Debt-to-Income Ratio (DTI).
Click here to use our Debt-to-Income Calculator.
To make an estimate, you need two basic numbers: Maximum Debt and Monthly Debt.
To calculate your Maximum Debt, add your Annual Base Income, Annual Bonus, Commission and Overtime, Annual Military Entitlements, and Other Annual Income (for example, child support or alimony) together. That is your Gross Income. Divide your Gross Income by 12 to get your Monthly Income. Finally, multiply your Monthly Income by 0.43 (which is 43%) and you’ll get your Maximum Debt.
Click here to use our Home Affordabilty Calculator.
Now, we’ll find your Gross Monthly Debt. Add together your Total Monthly Minimum Credit Card Payments, Car Payments, Personal Loan Payments, Student Loan Payments, and any other monthly debts. That number is your Gross Monthly Debt.
Subtract your Maximum Debt from your Gross Monthly Debt, and that is your maximum mortgage payment!
Click here to Calculate a Mortgage Payment.
Make sure to check out ALLIANCE’s suite of financial calculators so you can find out which home loan is right for you. Or, talk to one of our friendly Loan Officers!
