How Much Can I Borrow?
How Much Mortgage Can I Get Approved For?
How much mortgage you could be approved for depends on your income, debt, down payment, total monthly expenses and the type of mortgage. Our mortgage eligibility calculator crunches the numbers and helps you figure out the home loan amount you could qualify for.
How To Use Our Mortgage Eligibility Calculator
Ready to get a better understanding of how much house you could afford? Input the following information into each section of the mortgage eligibility calculator, then access your detailed results.
Monthly income. Any consistent income you receive, such as income from your job or rental properties you may own.
Monthly payments. Recurring monthly expenses such as student, auto, rental property loan and credit card payments.
Loan information. Your loan interest rate and term and your down payment. You’ll also want to include the annual property taxes and homeowners insurance premiums to get the most accurate results.
What Can I Borrow? Understanding Your Results
The mortgage eligibility calculator gives you an estimate of how much you could potentially borrow. Results are broken down into two categories:
- Conservative estimate: Lower home price, down payment and monthly principal and interest payments.
- Aggressive estimate: The maximum amount you may qualify for. Higher home price, down payment and monthly principal and interest payments.
Taxes and insurance remain the same in each estimate. Once you’ve found a monthly house payment that works for you, reach out to a Pennymac Loan Expert. They are happy to help walk you through the process.
How To Qualify For a Mortgage
To qualify for a mortgage, lenders will look for the following:
- A strong credit history and credit score
- Good debt-to-income ratio
- Proof of income and savings
Lenders will typically offer more favorable mortgage interest rates to homebuyers with lower debt obligations and higher credit scores.
What Can I Afford?
What you can comfortably afford vs. what you can borrow may be different. Your personal financial circumstances and goals can vary greatly from person to person. It's important to take the time to assess your own financial situation, consider your short-term and long-term goals and make decisions that align with your personal situation and objectives.
For example, if you have aggressive college and retirement savings plans, will you be able to continue putting away money at that pace if you have a higher mortgage? If not, a mortgage below the max may be a better fit. Or perhaps you’re starting out in your career and anticipate that your income will significantly increase within a few years. The higher loan amount may be well within your comfort zone.
How Much Do I Need For a Down Payment?
While a 20% down payment can help you avoid the additional cost of Private Mortgage Insurance (PMI), there are loan programs, such as FHA loans, that have much lower minimum down payment requirements.
How Much Money Do I Need To Buy a House?
Most people looking to buy a primary residence can do so with 3.5%-5% down and potentially 0% down if you’re a qualified veteran. However, there are many other costs to consider, including:
- Closing costs, which can range from 2%-6% of the home’s purchase price and cover fees for the home appraisal, title, mortgage origination and application
- Mortgage payments, which also include taxes and insurance premiums
- Prepaid costs that may go into an escrow account
- Homeowners Association (HOA) fees, if applicable
- Moving costs
- Home repairs and maintenance
- Furniture and home upgrades
Remember, you don’t need to exhaust all your cash on a down payment. If you have a good debt-to-income ratio and plan to stay in your new home a while, it might make sense to put down less and keep a reserve in savings.
A rule of thumb is that your total monthly mortgage payment and existing monthly debt obligations comprise no more than 36%-43% of your gross monthly income. Keep in mind that your mortgage payment includes your property taxes, insurance and, if applicable, mortgage insurance and/or monthly HOA dues.
When assessing your financial readiness for a home, it’s a good idea to also consider your savings. After closing and moving in, you should have some money left in savings to cover unexpected expenses that may arise.
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