Mortgage Income Calculator

Your income is one of the key elements lenders consider when deciding how much money you can borrow for a mortgage. See how much income you need to qualify.
NerdWallet
By NerdWallet 
Edited by Alice Holbrook Reviewed by Michelle Blackford

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Mortgage income calculator help

Here's what to know about the factors the calculator uses.

Home price: Housing prices vary widely. Talk to a local real estate agent or check out listings online to estimate how much you'd pay for the type of home you want.

Down payment: This is the amount you pay upfront for a property. The required down payment varies by the type of mortgage. The more you put down, the lower your monthly mortgage payment.

Loan term: The 30-year term is the most common because it has lower monthly payments than the 15-year term does, but the total cost of interest is higher over the course of the mortgage.

Interest rate: Average mortgage rates vary from day to day, and the rate you're offered will depend on your down payment, credit score, debt and income. Check the latest mortgage rates to estimate.

Recurring debt payments: Lenders use this information to calculate a debt-to-income ratio, or DTI. A good DTI, including your prospective housing costs, is under 36%, which means less than 36% of your income would be tied up in debt payments. But you can still qualify with a higher ratio.

Private mortgage insurance: If you put less than 20% down for a conventional loan, you typically will have to pay for private mortgage insurance, which will be included in your monthly mortgage payment.

Property tax and home insurance: As a homeowner, you'll have to pay property tax, and the lender will require you to buy home insurance. The cost for both is usually included in your monthly mortgage payment.

Homeowners association fee: A homeowners association, or HOA, is a resident-run group that governs a neighborhood, condominium complex or other housing development. The association sets rules and collects fees from property owners to pay for amenities, such as pools, parks and walkways. If the home you buy is in an HOA, then the fee will count as part of your housing costs.

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How much of your income should go toward a mortgage?

The 28/36 rule is a good benchmark: No more than 28% of a buyer’s pretax monthly income should go toward housing costs, and no more than 36% should go toward housing costs plus monthly debt payments. Housing costs include a mortgage payment, property taxes, home insurance, mortgage insurance and homeowners association fees. Debt payments include monthly bills for student loans, car loans, credit cards and other debt.

But you can qualify for a mortgage with higher housing and debt costs. For example, FHA loans, which are backed by the Federal Housing Administration, allow housing costs of up to 31% of pretax income and debts plus housing costs of up to 43% of pretax income. In certain cases, there may be a little more flexibility.

What if you're priced out of homebuying?

Rising interest rates and high prices put homeownership out of reach for many prospective buyers. Average mortgage rates started around 3% at the beginning of 2022 and topped 7% in the fall, while year-over-year home prices continued to rise every month.

Just because you don't make enough money now to qualify for a mortgage doesn't mean you'll never get there. Here are some steps you can take now to make buying a home possible later.

Pay down debt: A lower debt-to-income ratio will help you qualify for a mortgage and make homeownership more affordable. Paying down debt also will help elevate your credit score. Lenders offer the best mortgage rates to borrowers with high credit scores.

Continue saving for a down payment: The more you can pay upfront, the less you'll have to borrow and the lower your monthly mortgage payment will be.

Explore first-time home buyer programs: Local governments and organizations offer down payment and closing cost assistance programs as well as tax credits to first-time buyers. You may qualify even if you've owned a home before. A first-time buyer is usually defined as someone who hasn't owned a home for the past three years.

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Frequently asked questions

If you'd put 10% down on a $333,333 home, your mortgage would be about $300,000. In that case, NerdWallet recommends an annual pretax income of at least $110,820, although you may qualify with an annual income of $100,104. That assumes a 7% interest rate, a 30-year term, no recurring debt payments and no homeowners association fee. It also assumes estimated monthly costs for private mortgage insurance, property tax and home insurance.

If you'd put 10% down on a $444,444 home, your mortgage would be about $400,000. In that case, NerdWallet recommends an annual pretax income of at least $147,696, although you may qualify with an annual income of $133,404. That assumes a 7% interest rate, a 30-year term, no recurring debt payments and no homeowners association fee. It also assumes estimated monthly costs for private mortgage insurance, property tax and home insurance.

If you'd put 10% down on a $555,555 home, your mortgage would be about $500,000. In that case, NerdWallet recommends an annual pretax income of at least $184,656, although you may qualify with an annual income of $166,776. That assumes a 7% mortgage rate, a 30-year term, no recurring debt payments and no homeowners association fee. It also assumes estimated monthly costs for private mortgage insurance, property tax and home insurance.

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