Prequalification Calculator

Prequalification Calculator

Want to prequalify for a mortgage? Our mortgage pre-qualification calculator shows how lenders see you. See how much you can afford based on yearly income, debts & other factors. Our mortgage pre-qualification calculator will indicate how much you can borrow with a home loan by analyzing your income, assets, and current mortgage interest rates available to you.


How to use the Prequalification calculator

Enter Your Financial Information

  • Gross Monthly Pay: Your household income before taxes and deductions.
  • Loan Term: The number of years you'll have to repay your mortgage.
  • Annual Percentage Rate (APR): Enter the estimated mortgage interest rate (see a list of current mortgage interest rates).
  • Local Property Tax Rate: You can obtain this information from the local property tax collector's office or website. Enter the percentage rate (not the dollar amount) in the calculator.
  • Money Available for Down Payment and Closing Costs: The amount of cash you have to pay toward these expenses.
  • Other Monthly Obligations: Include recurring installment payments, including credit cards, auto payments, personal and education loans.

Click the "calculate" button, and check the results.

Home Purchase or Refinance: Can You Prequalify?

  • Home Value / Purchase Price: The maximum amount you prequalify for, based on the information provided.
  • Total Cash Paid at Closing: The amount you're contributing for closing costs and a down payment.
  • Cash Applied to Closing Costs: An estimate of closing costs.
  • Cash Applied to Down Payment: What's left of your cash contribution is used for a down payment.

 

Monthly Housing Expenses

  • Mortgage Payment: The amount of the principal and interest payment based on the amount you qualify to borrow and the interest rate you've entered.
  • Property Taxes: The estimated monthly amount of property taxes. If you're putting less than 20% down, this amount will be added to your mortgage payment.
  • Mortgage Insurance: A down payment of less than 20% of the purchase price will require mortgage insurance, which will be added to your mortgage payment.
  • Hazard Insurance: As with taxes and mortgage insurance, this will be added to your mortgage payment if you borrow more than 80% of your home's purchase price.
  • Total Housing Expense: This amount generally shouldn't exceed 28% of your gross income if you want to prequalify.
  • Other Monthly Expenses: The amount you entered for other monthly payment obligations.
  • Total Monthly Expenses: The sum of your total monthly housing payment and other monthly expenses. It generally exceed 36% of your gross monthly income for pre-qualification purposes.

These figures are guidelines. Those with spotless credit, lots of assets, or a very stable job history might qualify for more financing. Conversely, those with credit problems or minimal assets may qualify for less. We recommend that you speak directly with lenders to determine what is right for your situation. You can request up to four free quotes from competing lenders here, with no cost and absolutely no obligation to you.

You can also compare savings on loan terms, rates and amounts using the amortization calculator, and determine potential benefits of refinancing using the refinance calculator

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Comments


trucabe
2008-09-10 20:59:00
Excellent tool and excellent responses to the other "tools" below! Thanks so much for making this available and for your thorough responses to questions!

Tmares
2008-08-04 10:31:00
Okay, um the calculator says i can afford a $3,695,000 home. I entered $100,000 for annual income. How much more inacurate can this stupid thing be? - - EDITOR'S COMMENT - - _ The calculations are fine. You made a simple mistake by entering $100,000 when you should have entered $8,333 as your income. (The calculator asks for "monthly" income, not "annual" income.) I can re-create your results if I put $100,000 in monthly income, $10,000 in closing costs, and $0 in monthly expenses. Maybe you don't have any credit cards, auto loans, bank loans, student loans or anything like that, but if you do, you need to enter all monthly financial obligations that you'll be making payments on, in order to achieve accurate results. You can leave out irregular expenses like groceries, gas, utilities and other standard living expenses, and you can leave out any expenses that will be going away as soon as you start your new mortgage (such as rent on an apartment). But other than those types of things, lenders will factor in all your ongoing financial obligations into your prequalification calculations, so remember to include those. Please try your calculations again. I'm sure you will find that it will work well for you!

G
2008-07-18 20:35:00
Hmmmmmm....I just did this for a kick because we received our actual prequalification letter today. This calculator pre-qualified us for $130,000 LESS than our actual prequalification and for a payment that is almost $200 below what we are currently paying for rent. Not very accurate. - - - - EDITOR'S COMMENT: Actually, the calculator is accurate, but there's no law that says a given lender has to stick to the industry standard when deciding how much to lend you. Your lender is allowing you to stretch yourself thinner than most other lenders would feel comfortable with. Perhaps you have savings or other assets that could be converted into cash if you get into trouble, and this has raised your lender's confidence in your ability to repay. Or perhaps you're about to finish up a degree that will increase your employability significantly. Something has convinced the lender to lend you $130,000 more than would normally be practical. As to your other observation, the reason the calculator produced a lower payment is, of course, if you were to borrow $130,000 less, your monthly payment would be considerably lower that what your lender quoted you. Let me end with a note of friendly, cautionary advice. Borrowing as much as you possibly can is not the only path forward. If you can be happy while living below your means (finding a way to enjoy life while keeping your living expenses lower than average for your income), you will be less likely to find yourself plagued by future financial worries, you'll be able to pay cash for items you would othewise find yourself financing (such as furniture, vacations and automobiles), you'll be able to save more for emergencies, and you'll be in a better position to plan for a more enjoyable retirement. Please forgive me if I am being forward in saying this. It's just something to consider - some solid advice from my father to me, and now to you.

Radek
2008-06-24 17:13:00
My wife and I would like to buy investment rental property. - - - EDITOR'S REPLY: We at Calculators4Mortgages wish you well with your investment goals. Exploring the purchase of rental property as a valuable element of your investment strategy is a good idea. While we would like to be of assistance, this site is currently geared toward people who are purchasing a home to serve as their primary residence. We would like to expand into real estate investment calculators at some point, but we have no immediate plans to do so.

becky
2008-06-23 13:35:00
cool

Amanda
2008-06-17 20:49:00
What do we qualify for? - - - - EDITOR'S REPLY: The Mortgage Industry has a process that lenders refer to as pre-qualification. There may be a little variation on the calculation from lender to lender, but they are all very similar. Prequalification is basically a sanity check to see if your income and your debt-to-income ratio is appropriate for the size of loan you seek. If this calculator says you prequalify for a given amount, you should be able to ask a lender to provide you with a pre-qualification letter stating that you are pre-qualified for that amount. This can be useful, as some sellers will only work with people who are pre-qualified. In this way, they can be sure that a lender has at least looked at your income and your debt, and they believe you have a reasonable chance of being approved for the loan if you apply for it. Instead of going into the mortgage banker or mortgage broker's office "blind," the calculator allows to to first get an idea how their calculation works, and what amount they are likely to pre-qualify you for. I hope you find this calculator to be helpful.

jimmy
2008-06-16 19:21:00
nice

Mac
2008-05-27 11:46:00
thank you...

toganges
2008-05-27 06:33:00
accurate.

Rodger C.
2008-05-25 20:36:00
Excellent! I just put on my site to help sell my home. Perfect addition!! rrvhome.com - - - - EDITOR'S COMMENTS: Hey, I just took a look at your site. That's a nice looking home! I'm sure you'll have no problem finding a buyer to offer the right price. Adding a pre-qualification calculator to your site was a good idea. It should help by allowing people who can't afford your home to realize that right away so that they don't waste their time (and yours). Happy selling!

nader
2008-04-17 11:08:00
cool

jericho
2008-04-09 07:23:00
thanks

jesse
2008-04-09 07:13:00
great

Lora
2008-04-02 14:41:00
I like this so very much!! Thank you!!

kimco933
2008-03-21 06:09:00
This a very helpful tool. I will use it often

KAREN
2008-03-07 10:51:00
Something is seriously wrong with this calculator. I entered an income of $1800 with down of $5000 on a 30yr at 6% with $500 expenses and got a qualification for a purchase price of $29K !!! - - - - EDITOR'S COMMENT: To prequalify for a loan, your total monthly expenses (housing expenses plus other monthly obligations) cannot exceed 36% of your total gross monthly income. With an income of $1,800, this means your monthly expenses including housing should be limited to $648 per month. You have existing obligations of $500 per month, which only leaves $148 for your housing expense. This expense includes your mortgage payment, your property taxes, your mortgage insurance and your hazard insurance. With all this factored in, the standard prequalification method does not produce the size of loan you are looking for. Make sure you're entering your gross (not your net) income. This is greater than the amount that you deposit in your account. It is your income before social security and taxes and benefits and such are taken out. Also, make sure the $500 doesn't include utilities, gas, groceries, or that sort of thing. It should only include obligations such as credit card payments, auto loans, student loans and that sort of thing. Please let us know if you have other questions.

reagan
2008-01-22 22:43:00
hurray, thank you ;)

brian
2008-01-21 15:26:00
cool dude!

Nathan
2008-01-18 06:47:00
Looks great...Thanks

Antonides
2007-11-11 07:08:00
THANK YOU...I NOW KNOW WHERE I NEED TO BE FINANCIALLY!!!

Derek
2007-11-08 13:13:00
Great Tool....

chel
2007-11-07 12:11:00
nice

Jesse
2007-09-22 03:38:00
What a Great Tool, its great to have something to check your payments and not have to sign your life away. THANKS

Lee
2007-09-21 14:41:00
Thanks

Jessica
2007-06-28 20:16:00
Thanks for such a useful tool! Im glad I could use it without the hassle of putting in my info!

Mirsad K.
2007-06-28 13:59:00
I LIKE !!!

William
2007-06-17 17:48:00
Thanks for the wide range of calculators

Deb
2007-06-12 19:59:00
Great site! Very helpful, added to favorites! The greatest, no forms to fill out!!

aplin
2007-06-09 09:03:00
see you in Raleigh! thank you!

Casey
2007-06-06 11:25:00
Very helpful thank you

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