FHA Home Loan Affordability Calculator Online

FHA Affordability Formula:

\[ \text{Affordable price} = \left(\text{monthly income} \times 0.31 - \text{other debt}\right) \times \frac{(1 + r)^n - 1}{r \times (1 + r)^n} \times 12 - \text{down payment} \]

Monthly Income:

Other Monthly Debt Payments:

Monthly Interest Rate:

decimal

Loan Term (in months):

months

Down Payment:

Affordable Home Price:

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1. What is the FHA Affordability Calculator?

The FHA Home Loan Affordability Calculator estimates the maximum home price you can afford based on your income, debts, interest rate, loan term, and down payment. It follows the standard FHA guideline that your housing payment should not exceed 31% of your gross monthly income.

2. How Does the Calculator Work?

The calculator uses the FHA affordability formula:

\[ \text{Affordable price} = \left(\text{monthly income} \times 0.31 - \text{other debt}\right) \times \frac{(1 + r)^n - 1}{r \times (1 + r)^n} \times 12 - \text{down payment} \]

Where:

\( \text{monthly income} \) — Your gross monthly income
\( \text{other debt} \) — Your monthly debt obligations
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Loan term in months
\( \text{down payment} \) — Your available down payment

Explanation: The formula calculates the maximum mortgage amount you can afford based on your debt-to-income ratio and then adds your down payment to determine the total affordable home price.

3. Importance of Affordability Calculation

Details: Calculating your affordable home price helps prevent overborrowing, ensures comfortable monthly payments, and helps you shop for homes within your budget.

4. Using the Calculator

Tips: Enter your gross monthly income (before taxes), all monthly debt payments (credit cards, car loans, etc.), expected interest rate, loan term (typically 360 months for 30-year loan), and available down payment.

5. Frequently Asked Questions (FAQ)

Q1: Why is the 31% ratio used?
A: FHA guidelines recommend your housing payment (principal, interest, taxes, insurance) should not exceed 31% of your gross monthly income.

Q2: What's included in "other debt"?
A: Include all monthly debt obligations - car payments, credit card minimums, student loans, personal loans, etc.

Q3: How accurate is this calculator?
A: It provides a good estimate but doesn't account for property taxes, insurance, or PMI which affect actual affordability.

Q4: Can I exceed the 31% ratio?
A: Some lenders may allow up to 43% debt-to-income ratio with strong compensating factors.

Q5: Does this include closing costs?
A: No, you should budget an additional 2-5% of the home price for closing costs.