Samantha Taylor is a contributing Financial Writer, Moderator and Community Mentor of MortgageFit. She has been an active participant in the forums wherein she offers mortgage advice and suggestions to people in loan problems. If you have a query on “how much house can I afford” related issues, you can simply discuss it with her in the Mortgage Forum.
When you’re intending to purchase a new home of your choice, it is always better to work out the amount of money that you can afford as a home mortgage loan and the amount of loan that you can receive.
There are many websites that feature a home affordability calculator that can help you in working out how much money you can afford as a whole, probable down payment and the EMI (equated monthly installment) that you have to pay each month. Following are the precise steps that you have to stick with to use a home affordability calculator.
- Just open the home affordability calculator page featured by various websites.
- Input your gross monthly salary (incorporating your spouse’s salary, as well).
- Input any loan EMI amount that you’re paying at the present time. If there is no EMI that you’re currently paying, input zero in the required area where it is written “current EMIs”.
- Key in the term of your loan in years.
- Choose the interest rate of your home loan utilizing the slider available adjacent to “Interest Rate”.
- Choose the proportion of your gross monthly salary utilizing slider that you’re willing to pay as your EMI.
- See the outcomes which would demonstrate to you the “affordable EMI” together with the “maximum amount of loan you can afford”, “tentative down payment” and “value of the home you can afford”.
When the lenders are pleased with your repayment capacity, they would be willing to offer you 80%-85% of your home value as loan amount and the remaining 15%-20% you have to pay as down payment.
The highest EMI that one has to pay for the projected home must not go over 60% of their gross monthly salary. You should not forget to state the EMI amount of your previous loan if you have any at the time of utilizing the home affordability calculator.