Mortgage Prequalification Calculator: Do You Qualify for a Home Loan?

Mortgage Prequalification Calculator Sign

This calculator will calculate whether or not you would qualify for a home loan, and if so, how much of a home loan you might be qualifying for.

The calculator also includes built-in mini-calculators for totaling up your gross income, monthly debt payments, and estimated homeowner's insurance premiums.

Finally, the calculated results include one button to create a printer-friendly report of the calculations, and another button to open an amortization schedule in a printer friendly window.

If you would like to see how much house you can afford, versus what size mortgage you can qualify for, please visit the House Affordability Calculator, which includes a forecast of all homeownership costs.

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Mortgage Prequalification Calculator

Calculate size of mortgage you may qualify for, along with the resulting monthly PITI payment.

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Selected Data Record:

A Data Record is a set of calculator entries that are stored in your web browser's Local Storage. If a Data Record is currently selected in the "Data" tab, this line will list the name you gave to that data record. If no data record is selected, or you have no entries stored for this calculator, the line will display "None".

DataData recordData recordSelected data record: None
Income/yr:Income/year:Gross annual income:Gross annual income:
Income Conversion
If you would like me to convert your non-annual gross income(s) into one combined annual household income, enter the amounts (without dollar signs and commas) below and select the appropriate period for each amount.
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Annual gross:

Gross annual income:

Enter your gross annual household income (without dollar sign and comma). This is the amount before taxes are deducted. Expand the description in this row to combine and calculate up to 5 sources of income.

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Debt pmts:Mon debt pmts:Monthly debt payments:Monthly debt payments:
Monthly Debt Payments
If you would like me to total up your debt payments for you, enter the individual payments below (the labels are only reminders so ignore those that don't apply).
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Monthly debt pmt:

Monthly debt payments:

Enter the total of your non-mortgage monthly debt payments (without dollar sign and comma). This would include car loans, student loans, credit card payments and so on. Expand the description in this row to total from 1 to 10 debt payments.

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Down pmt:Down payment:Down payment:Down payment:

Down payment:

Enter the amount you have available for a down payment after paying closing costs (without dollar sign and comma).

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Int rate:Interest rate:Annual interest rate:Annual interest rate:

Annual interest rate:

Enter the annual interest rate you expect to pay on this mortgage. Enter the rate as a percentage but without the percent sign (for 6.25%, enter 6.25).

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Monthly ins:Monthly ins:Monthly insurance:Monthly insurance:
Monthly Insurance Estimator
If you would like me to estimate your insurance for you, enter the price of the home and adjust the default percentage (.125%) if you think it's too high or too low.
Home price:
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Insurance %:
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Monthly ins pmt:

Monthly insurance:

Enter the monthly insurance payment you expect to pay (without dollar sign and comma). As a rule of thumb, you can expect to pay .125% (home price X .00125) of the purchase price per month. Expand the description in this row to calculate the monthly insurance based on a percentage.

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Prop tax %:Annual tax %:Annual property tax percentage:Annual property tax percentage:

Annual property tax percentage:

Enter the annual property tax percentage you expect to pay. As a rule of thumb, you can expect to pay 1.1% of the purchase price per year.

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Mtg term:Mortgage term:Mortgage term in years:Mortgage term in number of years:

Mortgage term in number of years:

Select the term of the home loan in number of years.

Max pmt %:Max pmt ratio:Maximum pmt to income ratio:Maximum mortgage payment to income ratio:

Maximum mortgage payment to income ratio:

Enter your maximum mortgage payment to income ratio (without the percent sign). The default ratio is 28%, in which case your mortgage payment cannot exceed 28% of your monthly income.

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Max debt %:Max debt ratio:Maximum debt to income ratio:Maximum debt payments to income ratio:

Maximum debt payments to income ratio:

Enter your maximum mortgage payment plus debt payments to income ratio (without percent sign). The default ratio is 36%, in which case your mortgage payment plus your debt payments cannot exceed 36% of your monthly income.

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Down pmt:Down payment:Down payment:Down payment:

Down payment:

This is your original down payment amount.

Mtg amt:Mortgage amt:Mortgage loan amount:Mortgage loan amount:

Mortgage loan amount:

This is the maximum mortgage you would qualify for based on your current entries.

Home price:Home price:Home price:Home price:

Home price:

This is the price of the home you could purchase, which is the mortgage amount plus your down payment.

PMI pmt:PMI payment:Monthly PMI payment:Monthly PMI payment:

Monthly PMI payment:

This is your estimated monthly PMI (Private Mortgage Insurance) payment amount. This insurance is usually required for downpayments that are less than 20% of the purchase price of the home. And the lower the downpayment percentage falls below 20%, the higher the PMI premium will be.

Ins pmt:Insurance pmt:Monthly insurance payment:Monthly insurance payment:

Monthly insurance payment:

This is your estimated monthly insurance payment amount.

Tax pmt:Tax payment:Monthly property tax payment:Monthly property tax payment:

Monthly property tax payment:

This is your estimated monthly property tax payment amount.

P & I pmt:P & I payment:Monthly P & I payment:Monthly principal & interest payment:

Monthly principal & interest payment:

This is your estimated monthly principal and interest payment amount.

Total out:Total outflow:Total monthly cash outflow:Total monthly cash outflow:

Total monthly cash outflow:

This is the total of your monthly PMI, property taxes, homeowner insurance, and principal and interest payment.

If you would like to save the current entries to the secure online database, tap or click on the Data tab, select "New Data Record", give the data record a name, then tap or click the Save button. To save changes to previously saved entries, simply tap the Save button. Please select and "Clear" any data records you no longer need.

Help and Tools

Learn

Mortgage qualification benchmarks, plus a third ratio most home buyers fail to consider.

Mortgage Qualifying Benchmarks

If you've used a mortgage qualifier calculator on another website, you have probably seen the two standard benchmarks used to determine how much of a mortgage you qualify for. They are the PITI to income ratio and the debt to income ratio. In case you're not familiar with how these ratios are arrived at, or how they impact your home loan qualification, let's discuss each of them separately.

PITI to Income Ratio

The PITI to income ratio is one of two common formulas used to determine how much a lender is willing to borrow to a home buyer. PITI stands for Principal, Interest, Tax, and Insurance, which are the four parts that make up the typical mortgage payment. A fifth part, Private Mortgage Insurance (PMI) may also be included in the PITI figure where it applies (down payment is less than 20% of the home price).

The PITI to income ratio is calculated by dividing the total mortgage payment (PITI and PMI) by your gross monthly income. Since most home lenders only allow a maximum PITI to income ratio of 28% (though some lenders may go as high as 40%), you can determine your maximum PITI mortgage payment by multiplying your gross monthly household income by 28%. So if your gross monthly household income is $4,000, the most your monthly PITI mortgage payment can be is $1,120 (4,000 X .28).

Debt to Income Ratio

The debt to income ratio is basically the same as PITI to Income ratio, except that it also includes all non-mortgage monthly debt payments. So to calculate your debt to income ratio, you would add up all of your monthly non-mortgage payments (car payments, credit card payments, loan payments, etc.) and then add that result to your PITI mortgage payment. You then divide your total monthly mortgage and debt payments by your gross monthly household income to arrive at your maximum combined debt and mortgage payment.

Since most prudent home lenders allow a maximum debt to income ratio of 36% (though some money-hungry lenders may go as high as 48%), you can determine your maximum combined debt and mortgage payment by multiplying your gross monthly household income by 36%. So if your gross monthly household income is $4,000, the most your monthly combined debt and mortgage payment can be is $1,440 (4,000 X .36).

The Lesser of Two "Ratios"

Once the home lender has determined your maximum mortgage payment and your maximum combined debt and mortgage payment, they then use an algorithm to determine the maximum home loan amount for each. The lesser of these two loan amounts is then used to determine the maximum home loan you will qualify for. The mortgage prequalification calculator on this site attempts to mirror that qualifying process in its calculations.

A Third Ratio to Consider

A third ratio you should consider while determining the size of a home loan you want to qualify for is what I call the Financial Freedom Ratio, which is the amount of free time you have relative to the number of hours you are awake.

While there is no formula for calculating your financial freedom ratio, it's important to recognize that the more you spend to own and operate a home, the less discretionary time you will have at your disposal. I know a lot of families who are so busy working to pay for their expensive homes that they have little time to actually enjoy the homes they purchased. Sure, they have a nice house, but they have NO LIFE!

So please remember this when applying for a mortgage: Lending institutions could care less whether or not you have a life outside of working to pay for your home, i.e., your financial freedom ratio. All they care about is whether or not you make your house payments as they come due.

Adjust Calculator Width:

Move the slider to left and right to adjust the calculator width. Note that the Help and Tools panel will be hidden when the calculator is too wide to fit both on the screen. Moving the slider to the left will bring the instructions and tools panel back into view.

Also note that some calculators will reformat to accommodate the screen size as you make the calculator wider or narrower. If the calculator is narrow, columns of entry rows will be converted to a vertical entry form, whereas a wider calculator will display columns of entry rows, and the entry fields will be smaller in size ... since they will not need to be "thumb friendly".

Show/Hide Popup Keypads:

Select Show or Hide to show or hide the popup keypad icons located next to numeric entry fields. These are generally only needed for mobile devices that don't have decimal points in their numeric keypads. So if you are on a desktop, you may find the calculator to be more user-friendly and less cluttered without them.

Stick/Unstick Tools:

Select Stick or Unstick to stick or unstick the help and tools panel. Selecting "Stick" will keep the panel in view while scrolling the calculator vertically. If you find that annoying, select "Unstick" to keep the panel in a stationary position.

If the tools panel becomes "Unstuck" on its own, try clicking "Unstick" and then "Stick" to re-stick the panel.