1. What is the Zillow Affordability Calculator?

The Zillow Home Buying Calculator estimates how much house you can afford based on your income, debt, and current interest rates. It helps potential buyers understand their price range before starting their home search.

2. How Does the Calculator Work?

The calculator uses a standard affordability formula:

Where:

• \( Income \) — Your gross annual income
• \( Factor \) — Typically between 2.5 and 3.5 (varies by market conditions)

Explanation: The factor accounts for typical debt-to-income ratios and current mortgage rates. Higher rates generally mean lower factors.

3. Importance of Affordability Calculation

Details: Knowing your affordable price range helps focus your home search, prevents overextension, and ensures you can comfortably make mortgage payments.

4. Using the Calculator

Tips: Enter your gross annual income before taxes. Adjust the factor based on current mortgage rates (lower rates allow higher factors). Include all monthly debt payments for a more accurate estimate.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical affordability factor?
A: Traditionally 2.5-3.5, but varies with interest rates. Higher rates mean lower factors.

Q2: Should I use gross or net income?
A: Lenders typically use gross income, so this calculator does too for consistency.

Q3: What debts should I include?
A: Include car payments, student loans, credit card minimums, and other recurring debts.

Q4: Does this include property taxes and insurance?
A: The factor accounts for typical additional housing costs, but check local rates.

Q5: How often should I recalculate?
A: Whenever your income changes significantly or interest rates move by 0.5% or more.