Estimate how much home you can afford in Orange County with our affordability calculator. Simply enter your annual income, monthly expenses, property taxes, insurance, down payment, estimated interest rate and loan term.
Southern California and Orange County are one of the least-affordable places to buy a home in the nation. To help you decide where to start your home search use the affordability calculator.
Why Should I Use The Home Loan Affordability Calculator?
The short answer? To be truly ready to apply for a home loan, during the planning stages of your mortgage you’ll need an estimate of your monthly mortgage payments before you commit.
Can you afford a home loan at a certain price point combined with your other financial obligations? Your lender will definitely ask that question, and you’ll need to know the answer long before you apply.
Buying a home is a complex process. There are up-front fees, mortgage insurance, costs that are paid by the seller (and option you can choose to negotiate with the seller of the home), and there are charges your lender issues as a typical part of doing business with home loans.
If you are new to all this, using the calculator will help you to understand what information you need when it’s time to get pre-qualified or pre-approved.
And it will also help you understand the costs of your loan and how much to save. Using a home loan calculator early in your planning process helps you set realistic financial goals for saving and planning for your mortgage.
How To Use The Home Loan Affordability Calculator
To use the mortgage calculator you will need to prepare by gathering some information including a home sale price, potential property taxes, etc.
If you have not started house hunting yet, look at some local listings for the size and type of property you want to buy and use that as an initial guide.
You can estimate what you think you can afford and make adjustments from there. Having an estimated price of the property is important for estimating your property taxes, and you’ll also have to think about how much you want to use as a down payment.
The full list of things you’ll need to run in your home loan calculator includes:
- Annual Income
- Monthly Debts
- Estimated annual property taxes
- Estimated Annual Home Insurance
- Down Payment
- Interest Rate
- Loan Term
The loan length for a typical mortgage is either 15 or 30 years, especially for government-backed mortgages like FHA and USDA loans.
Homeowner’s insurance will affect the amount of money you spend on your mortgage each month, but keep in mind that homeowner’s insurance and mortgage insurance are two different things.
Mortgage insurance is typically required on FHA loans for either 11 years or the lifetime of the loan (depending on certain variables including your down payment), and for conventional mortgages you may find that putting 20% down gets you out of paying mortgage insurance.
Interest Rates
Interest rates should always be calculated conservatively. Your lender will offer you an interest rate based on several factors and one of those factors is your credit score. It’s a good idea to contact a lender and ask what interest rates are typically offered to people with your credit score range.
How Are Mortgage Payments Calculated?
The actual amount you’ll be required to pay in monthly mortgage payments is calculated by adding all the monthly expenses associated with your mortgage loan (see below) together including interest and dividing by the number of payments required.
This calculation is more complicated than just listing your principal balance, calculating the interest, and dividing by the loan term. The following variables will all need to be included in your mortgage payment calculation:
- Principal balance
- Interest rate
- Loan term
- Property taxes
- Any applicable Homeowners Association or Condo Owners Association fees
- Any applicable insurance
It may take some time to gather such information but it is definitely worth the effort. Your lender will be examining your income, employment, and credit use to decide whether or not you make a good credit risk.
Part of that includes adding up your monthly debts and the projected monthly mortgage payment to see how much of your income is taken up by financial obligations.
Knowing that, you can run those numbers yourself in the early stages of your home loan preparation. If your debt ratio is too high you can work to reduce it in the meantime, but first you have to know how expensive your mortgage payment might be.
Debt ratio maximums may vary from lender to lender, but in general try to get your debt ratio below 43% for best results. That basically means you should have a goal of using no more than 43% of your monthly income to pay your financial obligations each month.
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FAQs
Mortgage calculators provide general estimates based on the information you input, such as loan amount, interest rate, and loan term. While they offer a close approximation, keep in mind that actual payments may vary based on factors like taxes, insurance and interest rates.
Can I afford a 300k house on a 50k salary? ›
A person who makes $50,000 a year might be able to afford a house worth anywhere from $180,000 to nearly $300,000. That's because your annual salary isn't the only variable that determines your home buying budget. You also have to consider your credit score, current debts, mortgage rates, and many other factors.
How much income do you need to qualify for a $400000 home loan? ›
The annual salary needed to afford a $400,000 home is about $127,000. Over the past few years, prospective homeowners have chased a moving target: homeownership. The median sales price of houses sold in the U.S. stood at $417,700 in the fourth quarter of 2023—down from a peak of $479,500 in Q4 2022.
How much house can I afford if I make $36,000 a year? ›
On a salary of $36,000 per year, you can afford a house priced around $100,000-$110,000 with a monthly payment of just over $1,000. This assumes you have no other debts you're paying off, but also that you haven't been able to save much for a down payment.
Do mortgage calculators overestimate? ›
These mortgage calculators can often overestimate how much you can borrow, under-estimate how much you can borrow, or alternatively they may reject you outright even if you are a viable candidate.
Why are online mortgage calculators not accurate? ›
A lot of these calculators miss out on important elements like property tax, insurance and other costs that can have a huge impact on your monthly payment. If you're going to use a mortgage calculator, make sure it asks for more information than just the loan amount, term and interest rate.
Can I afford a 200K house on a 70K salary? ›
The 28/36 rule
This guideline states that you should spend no more than 28 percent of your income on housing costs, and no more than 36 percent on your total debt payments, including housing costs. (So that would also include credit card bills, car payments and any other debt you may carry.)
Can I afford a 500K house on 100k salary? ›
That monthly payment comes to $36,000 annually. Applying the 28/36 rule, which states that you shouldn't spend more than around a third of your income on housing, multiply $36,000 by three and you get $108,000. So to afford a $500K house you'd have to make at least $108,000 per year.
Can I afford a 300K house on a 70K salary? ›
If you make $70K a year, you can likely afford a home between $290,000 and $310,000*. Depending on your personal finances, that's a monthly house payment between $2,000 and $2,500. Keep in mind that figure will include your monthly mortgage payment, taxes, and insurance.
What is the 20% down payment on a $400 000 house? ›
Putting down this amount generally means you won't have to worry about private mortgage insurance (PMI), which eliminates one cost of home ownership. For a $400,000 home, a 20% down payment comes to $80,000. That means your loan is for $320,000.
Your payment should not be more than 28%. of your total gross monthly income. That means you'll need to make 11,500 dollars a month, or 138 k per year. in order to comfortably afford this 400,000 dollar home.
What is the monthly payment on a 350k mortgage? ›
On a $350,000, 30-year mortgage with a 6% APR, you can expect a monthly payment of $2,098.43, not including taxes and interest (these vary by location and property, so they can't be calculated without more detail). The payment would jump to $2,953.50 for a 15-year loan.
Can someone who makes 40K a year afford a house? ›
How much house can I afford with 40,000 a year? With a $40,000 annual salary, you should be able to afford a home that is between $100,000 and $160,000. The final amount that a bank is willing to offer will depend on your financial history and current credit score.
Can a single person live on $36,000 a year? ›
In some regions with a lower cost of living, a $36,000 salary can provide a comfortable lifestyle and the ability to save for the future, making it a good income for your age. However, in high-cost-of-living areas, this salary might require careful budgeting to maintain the same standard of living.
Can I afford a house making 40K a year? ›
If you have minimal or no existing monthly debt payments, between $103,800 and $236,100 is about how much house you can afford on $40K a year. Exactly how much you spend on a house within that range depends on your financial situation and how much down payment you can afford to invest.
Are mortgage borrowing calculators accurate? ›
Mortgage and loan calculators can be handy for getting a quick estimate of repayment figures. However, their reliability relies on the accuracy of the details you provide.
Are loan calculators accurate? ›
Online mortgage calculators are widely used by first-time homebuyers, but they are one of the most dangerous financial tools because they provide misleading information.
How much house can I afford if I make $70,000 a year? ›
If you make $70K a year, you can likely afford a home between $290,000 and $310,000*. Depending on your personal finances, that's a monthly house payment between $2,000 and $2,500. Keep in mind that figure will include your monthly mortgage payment, taxes, and insurance.
Are online loan calculators accurate? ›
However, these calculators should be taken with a grain of salt. They can give you a rough estimate as to how much you can expect to pay, but they can't give you an exact amount. There are too many variables that can change and affect your exact monthly price.
