Home Loan Affordability Calculator FHA

FHA Affordability Formula:

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

Monthly Income:

Other Monthly Debt:

Interest Rate:

Loan Term:

years

Down Payment:

Affordable Home Price:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the FHA Affordability Calculator?

This calculator estimates the maximum home price you can afford using FHA loan guidelines, which typically allow higher debt-to-income ratios than conventional loans. It follows the standard FHA formula that lenders use to determine affordability.

2. How Does the Calculator Work?

The calculator uses the FHA affordability formula:

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

Where:

\( \text{monthly income} \) — Your gross monthly income
\( 0.31 \) — FHA's maximum front-end debt-to-income ratio (31%)
\( \text{other debt} \) — Monthly debt obligations
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Total number of monthly payments (term × 12)
\( \text{down payment} \) — Your available down payment

Explanation: The formula calculates the maximum mortgage payment you can afford (31% of income minus other debts), then determines the loan amount that payment would support, and finally adds your down payment to determine total affordable price.

3. Importance of Affordability Calculation

Details: Knowing your affordable price range helps you shop for homes within your budget and improves your chances of loan approval. FHA loans are particularly helpful for first-time homebuyers with limited down payments.

4. Using the Calculator

Tips: Enter your gross monthly income (before taxes), all monthly debt payments, current interest rates, desired loan term (typically 30 years), and available down payment. The calculator assumes a 31% housing expense ratio which is FHA's standard.

5. Frequently Asked Questions (FAQ)

Q1: What is the 31% ratio in the formula?
A: FHA typically allows up to 31% of gross monthly income for housing expenses (principal, interest, taxes, insurance).

Q2: What debts should I include?
A: Include all monthly debt payments: car loans, student loans, credit cards, personal loans, etc.

Q3: Does this include property taxes and insurance?
A: The 31% ratio typically includes these costs, so the result is an estimate of total home price including these factors.

Q4: What's the minimum down payment for FHA?
A: FHA requires at least 3.5% down payment for borrowers with credit scores of 580+. Those with 500-579 need 10% down.

Q5: Can I afford more than this calculator shows?
A: Some lenders may approve higher ratios with compensating factors, but staying within this range is safer financially.