How much home can you afford?
When you’re thinking about buying a home, figuring out how much you can afford is a great first step. Use our VA home affordability calculator to get an estimate!
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About our VA loan mortgage affordability calculator
Figuring out how much home you can afford is a great first step when you want to buy a home with a VA loan. That’s why we offer this VA loan calculator. It will help you understand the price of houses that fit your budget.
VA loans are a great choice for homebuyers who qualify. VA loans have competitive interest rates, $0 down payments for many homebuyers, and no mortgage insurance. Veterans, active-duty military personnel, and surviving spouses can all be eligible for VA loans.
Our VA loan calculator estimates affordability starting with your annual gross income. Then it adds in these important financial factors.
These are payments for things besides your mortgage like car loans, student loans, and credit cards. Lenders want to feel confident you will be able to afford all your monthly bills – not just your monthly mortgage payment – before they approve your VA loan.
We often do this with your debt-to-income ratio (DTI). Debt-to-income ratio is calculated by dividing your total monthly debt by your monthly income and making the result a percentage. For example, pretend you have a monthly income of $7,000. Then pretend you have monthly debt payments that total $800 and you want to buy a home with a $2,000 monthly payment. That means your total monthly debt would be $2,800.
To figure out your DTI, divide the $2,800 by $7,000 and get 0.4 or 40%. This is good to know because VA loans often have a maximum DTI of 41%. Calculating your debt-to-income ratio helps you understand how much home you can afford as well as the amount of money lenders may be willing to let you borrow to buy a home with a VA loan.
Many times, VA loans allow you to buy a home with a $0 down payment. However, making a down payment can lower the cost of your VA funding fee. It can also save you money on interest payments because you are borrowing less money to buy your home. Learn more about VA loan down payments.
The number of years you have to pay back a VA loan is called its term. VA mortgages often have 30-year terms. Choosing a VA loan with a term shorter than 30 years can help you save money on interest. However, shorter term VA loans often have higher minimum monthly payments.
VA loans often have competitive interest rates because they are backed by the federal government. The mortgage rate has a big impact on the price of homes you can afford. If rates are low, you might be able to buy a more expensive home versus when rates are high.
Payments for property taxes and homeowner’s insurance are part of your monthly VA loan payment. Buying a home in a community with lower property taxes can help make your home more affordable since this will impact your monthly mortgage payment. Shopping around for cheaper homeowner’s insurance might help too.