1. What is the House Affordability Calculator?

The House Affordability Calculator helps you determine how much house you can afford based on your income and existing debt obligations. This tool follows Trulia's approach to real estate affordability.

2. How Does the Calculator Work?

The calculator uses a simple but effective formula:

Where:

• \( Income \) — Your annual gross income
• \( Debt \) — Your annual debt payments

Explanation: This calculation shows your available funds after accounting for existing debt obligations, which is a key factor in determining mortgage eligibility.

3. Importance of Affordability Calculation

Details: Understanding your true affordability helps prevent overextension and ensures you look at properties within your comfortable price range.

4. Using the Calculator

Tips: Enter your total annual income and annual debt payments (including car loans, student loans, credit cards, etc.). Use gross income (before taxes) for this calculation.

5. Frequently Asked Questions (FAQ)

Q1: Should I include taxes in my income?
A: No, use your gross income (before taxes) for this calculation.

Q2: What debts should I include?
A: Include all recurring debt payments: car loans, student loans, credit card minimums, personal loans, etc.

Q3: How does this relate to mortgage approval?
A: Lenders typically want your total debt (including new mortgage) to be below 43% of your income.

Q4: What's a good affordability number?
A: Ideally, your housing costs should be 28% or less of your gross monthly income.

Q5: Does this include down payment?
A: This is a basic calculator. For more precise estimates, consider down payment and other factors.