The most common term for a mortgage is 30 years, or 360 months, but different terms are available depending on the type of home loan that works best for your situation. The length by which you agree to pay back the home loan. Your interest rate will vary based on factors like credit score and down payment. Our affordability calculator uses the current national average mortgage rate. The borrower makes payments (with interest) to the lender over a set period of time until the loan is paid in full. Typically, the interest rate is expressed as an annual percentage of the loan balance. The amount that a lender charges a borrower for taking out a loan. You can get an estimate of your debt-to-income ratio using our DTI Calculator. Our affordability calculator will suggest a DTI of 36% by default. Your DTI is one way lenders measure your ability to manage monthly payments and repay the money you plan to borrow. The total of your monthly debt payments divided by your gross monthly income, which is shown as a percentage. A 20% down payment is ideal to lower your monthly payment, avoid private mortgage insurance and increase your affordability. Most home loans require a down payment of at least 3%. The amount of money you spend upfront to purchase a home. For example, if you have a $250 monthly car payment and $50 minimum credit card payment, your monthly debt would be $300. You can adjust this amount in our affordability calculator as needed. These are recurring monthly expenses like car payments, minimum credit card payments or student loans. If you have a co-borrower who will contribute to the mortgage, combine the total of both incomes to get your annual income. You can usually find the amount on your W2 form. This is the total amount of money earned for the year before taxes and other deductions. Learn more about the line items in our calculator to determine your ideal housing budget. Our calculator also includes advanced filters to help you get a more accurate estimate of your house affordability, including specific amounts of property taxes, homeowner's insurance and HOA dues (if applicable). You can calculate affordability based on your annual income, monthly debts and down payment, or based on your estimated monthly payments and down payment amount. Zillow's affordability calculator allows you to customize your payment details, while also providing helpful suggestions in each field to get you started.
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