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How Much Home Can I Afford?

Include income from full-time or part-time work, self-employment, tips, commissions, overtime, bonuses or other sources.
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Include funds from savings, checking, retirement (401K or IRA) accounts, gifts, as well as investments that you want to use for your down payment and closing costs.
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Include any minimum payments for credit card debt, car loans, student loans, child support, or alimony.
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Include costs like groceries, internet/phone services, and any monthly subscriptions.
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A credit score is a number between 300 and 850 that predicts how likely you are to pay back a loan on time. Typically, the higher the score, the better your chances of qualifying for a loan at a good interest rate.
Example of How Much Can I Afford in Home Affordability Calculator

What home price can I afford?

Understand what home price range makes the most sense for your budget and income.

Example of Available Homes in Home Affordability Calculator

What's available in my price range?

Get tailored listing results and notifications based on affordable homes in your area.

Example of How Much Will I Be Prequalified for in Home Affordability Calculator

What might a lender give me?

Understand what loan amount a lender may give you, based on your income, credit, and debts.

Images and numeric data shown are for example purposes only. Individual result may vary.

How We Calculate Your Home Affordability

Your Location

We use your location to estimate how local taxes and insurance costs impact your final home price. Depending on your state, taxes and insurance are usually included as part of your monthly mortgage payment.

Your Monthly Expenses

We factor in how much you pay monthly for things like groceries and utilities so that our final estimate makes sense for your budget. This ensures that your new home fits the lifestyle you want to live.

Your Debt-to-Income Ratio

We’ll ask for your annual gross income and monthly debts. We compare these amounts using what’s known as a debt-to-income ratio, or how much of your monthly income goes toward debt. This factors into your final home affordability and how much of a mortgage you may qualify for.

Your Available Funds

This is how much money you’re planning to use toward your home purchase. When you’re deciding what to put here, consider your down payment as well as closing costs. Most buyers need at least 3% of the home’s purchase price for a down payment, and another 2% to 5% for closing costs.

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Frequently Asked Questions About Home Affordability

How has COVID-19 impacted the real estate market?

While the spread of COVID-19 has slowed real estate somewhat, there is still ample opportunity to find your dream home safely and affordably. Mortgage rates are historically low during this time, and there is increased opportunity to buy in suburban areas, given less population density.

Real estate agents are now offering virtual tours that you can participate in safely from a distance. All that being said, financial security should be your number one priority when deciding to buy a home.

Learn more about how COVID-19 is impacting buying and selling a house here.

How can I increase how much home I can afford?

The biggest factors that affect how much home you can afford are your income, savings and credit score. While you may not be able to do much about reducing the debt you owe, you can adjust your budget so you’re saving more money every month for a down payment. Some ways to do this include:
  • Reducing extra or unnecessary expenses such as eating out, subscription fees or travel.
  • Putting 5% to 10% of your monthly income toward a savings or investment account.
  • Paying off credit card bills early to increase your credit score.

What other fees do I need to consider when buying a home?

There’s more to the cost of buying a home beyond the initial price tag. You will also need to consider both one-time costs and recurring costs.

One-time costs include the house’s down payment, which is typically at least 3% of the home’s purchase price, and closing costs, which usually add up to 2% to 5% of the total cost or more.

Ongoing expenses include your monthly mortgage payments, property taxes, insurance, HOA fees and more.

You can learn all about the fees associated with buying a home here.

What’s the difference between what I can afford and what I prequalify for?

Your home affordability amount is the payment amount that comfortably fits into your monthly budget. It's best to keep your mortgage payment around 25% of your overall monthly budget.

Your prequalification amount is how much of a mortgage you could be approved for. Typically, this amount reflects how much a lender would feel comfortable approving you for based on the minimum requirements.

How do I know when I’m ready to apply for a mortgage?

Before applying for a mortgage, it helps to have a clear understanding of your finances and what you can afford. If you want to do a quick calculation, your monthly mortgage payment should ideally be no more than 25% of your gross income.

We can help you plan these next steps through our Home Buying Plan on the Rocket Homes® mobile app.

Ready to get approved? Maximize your buying power with a Verified Approval from Rocket Mortgage® . Get started online today!

How can I increase my loan or mortgage amount?

Your credit score is one of the most important factors in qualifying for a home loan. For example, the interest rate and loan terms you receive are tied directly to your score.

See tips to help you improve your score and monitor your credit on the Rocket Homes® mobile app.

How does debt impact my affordability?

Along with your income, your monthly debt payments and expenses will play a critical role in how much you can spend on a house. The more money you have to pay off credit cards, student loans, car payments and alimony, the less you’ll have to pay for a mortgage and housing-related expenses. At the same time, you’ll also need to factor in groceries, utilities, telephone bills and other necessities to ensure you’re able to live comfortably.

What credit do I need to get the best mortgage loan / rate?

While lenders vary in what score will prequalify you and at what interest rate, Rocket Mortgage® requires a minimum FICO credit score of 620 for a conventional loan and 580 for a Federal Housing Administration (FHA) loan. A higher credit score will generally help you get better mortgage terms and a lower interest rate, which will save you money over time.

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