1. What is the House Affordability Calculator?

The House Affordability Calculator estimates how much home you can afford based on your annual income and a standard affordability factor. This follows the Trulia mortgage affordability guidelines.

2. How Does the Calculator Work?

The calculator uses the simple affordability formula:

Where:

• \( Income \) — Your annual gross income in dollars
• \( Factor \) — Multiplier typically between 2.5 and 4.5

Explanation: The factor accounts for interest rates, property taxes, and other housing costs. Higher factors mean more borrowing capacity.

3. Importance of Affordability Calculation

Details: Calculating home affordability helps prevent overborrowing and ensures you can comfortably make mortgage payments.

4. Using the Calculator

Tips: Enter your annual income before taxes and select an appropriate factor based on current mortgage rates and your financial situation.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical affordability factor?
A: Most lenders use factors between 2.5 and 4.5, with 3.5 being a common baseline.

Q2: Should I use gross or net income?
A: This calculator uses gross income (before taxes) as that's the standard lenders use.

Q3: How does interest rate affect the factor?
A: Higher interest rates generally mean you should use a lower factor, while lower rates allow higher factors.

Q4: What other costs should I consider?
A: Remember to account for property taxes, insurance, maintenance, and other housing costs beyond the mortgage.

Q5: Is this calculator accurate for all locations?
A: While the formula works everywhere, local housing markets and tax rates may affect actual affordability.