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Mortgage Affordability Calculator

The affordability calculator is a great tool to use if you are contemplating buying a new house, or refinancing your current mortgage. The calculator will compute the new mortgage payment and display your new debt-to-income ratio's. These ratio's will help you understand whether, and to what degree, you can afford the new mortgage payment. Even if you are not considering a refinance or new home purchase - this calculator can be useful to understand what your current debt to income level is.

Mortgage Affordability Calculator

Mortgage Calculator ML

How to use the calculator

Enter the information on your proposed new mortgage (down payment, loan amount, interest rate, and term). Use the default estimated front and back ratio field values.

Next, enter the monthly gross income for all the sources in your household. The next section asks you to indicate all your monthly debt payments. No need to include your first mortgage payment here. Finally, enter the taxes and insurance information for your mortgage loan.

Notice your front and back ratio's - which are also referred to as debt-to-income ratio's. The front ratio measures how much of your income is going towards the housing expense. The back ratio is used to show how much of your income is going to pay all your debt (housing included). As a rule of thumb, the lower the debt ratio - the better. A front ratio higher than 34%, and a back ratio more than 45%, are typcially considered high. Keep in mind that every mortgage lender has their opwn set of approval guidelines. Some may be more stringent and require lower ratio's.