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It's a good idea to get a mortgage preapproval before you shop, but if you are wondering how much home you can afford, this calculator will give you a general price range. Starting with the price of the home, the mortgage interest rate, and the size of your down payment, you can estimate the monthly income you would need to qualify. For example, if the home you hope to buy is listed at $300,000.00 and you plan to put $30,000.00 down on a 30 year loan with a 5.875% interest rate, your total payment for principal and interest would be $1,597.15. If your property taxes are $3,000.00 annually and your insurance is $1,500.00, your total monthly payment would be $2,084.65. Your gross monthly income would need to be $6,948.84 to qualify for the payment on this loan. Your estimated front and back ratios are used to compare your housing expenses with your other normal living costs. The "front ratio" is the percentage of your gross income related to your housing costs, including property taxes and insurance. The "back ratio" is the percentage of your gross income needed to cover both housing and all of your routine monthly expenses such as food, transportation, clothing, etc. Typically, your front/back ratios should be in the range of 28%-33%/36%-42% and no higher than 35%/45%.
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