1. What is the Zillow Affordable Mortgage Calculator?

The Zillow Affordable Mortgage Calculator helps determine how much mortgage you can afford based on your income, debt-to-income ratio, and current interest rate adjustments.

2. How Does the Calculator Work?

The calculator uses the affordability formula:

Where:

• \( Income \) — Annual income in dollars
• \( DTI \) — Debt-to-income ratio (decimal form, e.g., 0.36 for 36%)
• \( Rate\ Adjustment \) — Factor accounting for current interest rates

Explanation: The equation calculates the maximum mortgage payment you can afford based on standard lending guidelines.

3. Importance of Mortgage Affordability

Details: Understanding your affordable mortgage range helps in home shopping, budgeting, and loan pre-approval processes.

4. Using the Calculator

Tips: Enter your gross annual income, your target DTI ratio (typically 0.36-0.43), and current rate adjustment factor (often around 1.0).

5. Frequently Asked Questions (FAQ)

Q1: What is a good DTI ratio?
A: Most lenders prefer DTI below 36%, though some may accept up to 43% for qualified borrowers.

Q2: How does interest rate affect affordability?
A: Higher rates decrease affordability as more of your payment goes toward interest rather than principal.

Q3: Should I include bonuses in my income?
A: Only include consistent, verifiable income that lenders would consider in your application.

Q4: What other factors affect mortgage approval?
A: Credit score, down payment, assets, employment history, and property type all influence approval.

Q5: Is this calculator accurate for all loan types?
A: It provides a general estimate. FHA, VA, and jumbo loans may have different qualifying criteria.