House affordability Calculator: How Much Home is Within Your Reach?

By Geoff Walker
Calculators for Mortgages Columnist

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Mortgage companies look at two main things when they decide how much they can lend you. The first is the value of the property you want to buy. What is it worth? Is it in good condition? The property is the 'security' for the loan. If it is a sound investment, it makes the loan safer for mortgage companies, which is why they can offer attractive mortgage rates. The second is you. How much do you earn? What is your credit history? Do you have existing loans?  Mortgage companies want to make sure you can afford the monthly payments.

Mortgage companies may differ in the amount they are prepared to lend you, in terms of the percentage of your home valuation and what your earnings need to be, so you should certainly shop around to see what deals you can find. You should also use the house affordability calculator so you know what price home you can afford.

Mortgage House Affordability Calculator: How it Works

The home affordability calculator requires three pieces of data from you:

• The number of years over which your mortgage loan will run
• The mortgage interest rate
• The monthly amount you can afford as a mortgage payment

Then click 'calculate' and the home affordability calculator calculates what you can afford.

Don't just take the house affordability calculator's word though!  It is a useful guide, but mortgage companies have different guidelines, deals, types of loan, and mortgage rates to offer. Use the house affordability calculator as an indicator, but also talk to multiple mortgage lenders so you can find the affordable loan that's right for you.



About the Author
A freelance writer with degrees in arts and commerce, Geoff Walker has experience in corporate financial management, mortgages, and fund-raising.