When people is looking for a house to buy, there are two things in relation with financial that they are usually considered. The first one is the front payment which consists of down payment and closing cost, the second one is the monthly mortgage payment. These two things is the main key to measure their personal financial situation to buy their expected house.
This house affordability calculator will help you get a rough figure on your affordability for buying a house. Since this tool is built with general assumption, please consult with your financial advisors or banks if you want to have a real calculation.
This spreadsheet consist of two worksheets. The first worksheet is a simple house affordability calculator that will calculate house price quickly based on your expected monthly payment. Just fill in corresponding column your targeted interest rate, loan payment period and expected monthly payment. The affordable house price will be calculated automatically.
The second worksheet is a more detailed house affordability calculator.You have to fill more detail information about your financial condition, your budget, your mortgage plan and your bank or financial institution qualification. After filling all datas this tool will calculate the optimum house price based on the closest conditions you can achieve.
Below are short descriptions about each financial terms :
Income and Debt Expenses
– Gross Monthly Income : Your gross income per month
– Monthly Debt Repayment : Your debt obligation that you have to pay monthly, for example your credit card loan, student loan, car loan etc.
Budget
– Down Payment and Closing Cost : Your expected down payment. And closing costs are any costs that arise in house transaction, like legal fee, administration fee, taxes etc
– Monthly Payment : Your expected monthly mortgage payment
– Monthly Housing Costs : These are other housing costs in addition of your mortgage, like insurance, that you have to pay monthly along with paying your mortgage payment
Mortgage Plan
– Interest Rate : This is your expected interest rate based on bank or financial institution interest rate
– Payment Period : This is the period (in year) that you plan to payoff your mortgage
Qualification
– Closing Costs : Check your bank or financial institution qualification for minimum closing costs. I put 5% from house price.
– Minimum Down Payment Required : Check your bank or financial institution qualification for minimum down payment needed.
– Maximum Debt Repayment Allowed : Check your bank or financial institution qualification for maximum percentage of debt repayment allowed from your gross income. The total of your debt repayment + house payment cannot exceed this number.
– Maximum Housing Expense Allowed (%) : This number will limit the amount of your monthly expenses that has been budgeted for paying your monthly mortgage.
After you finished filling the left part of this worksheet, you can see your affordable house price including the detail of down payment and closing cost needed along with allowable monthly payment. Use this tool as your general reference only. You can adjust any numbers inside the worksheet to suit your budget, but always consult with your banks or financial advisors to get more clear information and calculation of your house financial issues.
