Mortgage Info.
Mortgage Formula Cheat Sheet
Thinking about buying a home and curious about the numbers? Use this quick guide to understand how much a mortgage might cost each month—and how much home you can comfortably afford.
💰 Example Home and Income Figures
- Median Home Price: $220,000
- Average Income: $54,000/year
- Average Annual Debt: $7,630
🏡 What Will a Mortgage Cost Per Month?
Most buyers choose a 30-year mortgage to keep payments manageable. Here’s what that looks like:
- Loan amount: $176,000 (after 20% down)
- Interest rate: 7%
- Estimated monthly payment: $1,171.71
This estimate does not include property taxes, insurance, HOA fees, or maintenance costs.
| Term | Monthly Payment | Total Interest Paid |
|---|---|---|
| 30 years | $1,171.71 | $246,813.60 |
| 15 years | $1,583.78 | $109,080.40 |
💸 How Much House Can I Afford Based on My Income?
Here’s a general guide to what home price you may qualify for, assuming a 30-year loan at 7% interest, 3% down payment, and staying under a 36% debt-to-income (DTI) ratio:
| Annual Income | Estimated Home Price |
|---|---|
| $40,000 | ~$155,000 |
| $50,000 | ~$195,000 |
| $60,000 | ~$235,000 |
| $70,000 | ~$275,000 |
| $80,000 | ~$315,000 |
| $90,000 | ~$355,000 |
| $100,000 | ~$395,000 |
These are ballpark figures. The actual affordability depends on your credit, debts, down payment, and location.
🧮 How Is Affordability Calculated?
Lenders use your Debt-to-Income (DTI) ratio to determine what you can afford. Most conventional loans require a DTI of 36% or lower.
Example:
- Income: $54,000/year = $4,500/month
- Monthly Debts: $636
- Mortgage Estimate: $1,171.71
- Total Monthly Debt: $1,807.71
- DTI Ratio: $1,807.71 ÷ $4,500 = 40.2%
✅ This is below the 36% guideline and would typically be approved by most lenders.
