Using Mortgage Calculators to Determine How Much You Can Really Afford to Borrow

There are various types of mortgage calculators. Some of them determine payment amounts; others compare lender rates and still others allow you to determine whether or not you should even waste your time with the loan process. We’re going to analyze some mortgage calculators that can tell us whether or not we can actually afford a mortgage. They will tell us exactly how much we can honestly aspire to borrow. So here’s what you need to know.

First, there are mortgage calculators that can tell us whether or not our current income will qualify us for a specific mortgage. In this case we simply input our desired mortgage amount, the mortgage length in years, the interest rates offered by the lender, how much we pay in taxes and here's the tricky part: how much we currently pay in non-mortgage related debt. The mortgage calculators will then compute how much we will pay in interests plus principal then add to that taxes and insurance and finally show us how much our required salary will be in order to qualify for the loan.

Second, we can use mortgage calculators that will compute what the maximum loan amount we can qualify for will be. In this case we don't start out with a specific mortgage amount. The mortgage calculators will calculate that amount for us at the end, along with telling us what the maximum monthly mortgage payments we can really afford to pay will be.

Here we provide the mortgage calculators with our monthly income (including salary and other income) as well as with expenses (car payments, credit card debt, current housing expenses, etc.) We then provide the mortgage calculators with the current interest rates and the loan term (i.e. 30 year fixed, 15 year, etc.). The mortgage calculators will then process our data and tell us how much we can borrow.