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Do you know whether or not you can afford a home loan in the new year? You can get started by reviewing all monthly debt. Compare your bills to your income on a monthly basis and ask yourself how much you might be able to afford based on how much you earn and pay now.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

Can You Afford an FHA Mortgage?

December 13, 2021

Can You Afford an FHA Mortgage?
Do you know whether or not you can afford a home loan in the new year? It’s not as difficult to find out what a mortgage payment might do to your financial bottom line, and while it may seem like a lot of data to gather (principal, interest, taxes, and fees), there are online mortgage calculators that can help you to arrive at the estimate you need.

How to begin? You can get started by reviewing all monthly debt. Compare your bills to your income on a monthly basis and ask yourself how much you might be able to afford based on how much you earn and pay now.

The number you get is a preliminary one--don’t be discouraged or overconfident based on the initial figures you get--they are not necessarily the same ones you might wind up using in the final mortgage calculation.

There are good reasons for that--including variables like interest rates and whether or not you qualify for first-time buyer assistance with grants for your down payment or other costs.
But the results you get from running your first calculations will give you a better idea of what you might be able to afford. But the next step is crucial--you want to start figuring out whether the homes in your chosen housing market are within your price range.

Find some homes that appeal to you in the housing market you want to apply in--get prices on a one-bedroom, two-bedroom home, etc.

Whatever size you require should be your guide and don’t choose a home smaller than you need--try to select the most realistic option for your living situation and see how the numbers work out.

Pick some high, medium, and lower-priced homes and try to run some numbers using a mortgage calculator. A good mortgage calculator will NOT simply take the principal loan amount plus an anticipated interest rate--it should prompt you for other figures like property taxes, interest, etc.

You may need to use the current figures available online to make your math work and revisit it when you have more accurate numbers later on. But as a general estimate, this is a good approach to consider using.

If the size and asking price of the home don’t match up with your financial goals after running the calculations, you may need to look for homes with a lower price point, consider your willingness to negotiate or haggle, etc.

But if the numbers make sense and the amount of your mortgage plus your other outgoing debt won’t eat too much of your monthly income, you are a lot closer to getting a loan approved. You can also work with a real estate agent or a participating lender to get more clarification on realistic expectations in your housing market for price, home size, financial commitment, etc.

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